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                                                                  EXHIBIT 10.114



                        PURCHASE AND SERVICING AGREEMENT



         This Purchase and Servicing Agreement, dated as of May 30, 1997, is
between Preferred Equities Corporation, a Nevada corporation having an address
of and office at 4310 Paradise Road, Las Vegas, Nevada 89109-6597 (hereafter
referred to as "Seller") and BankBoston, N.A., a national banking association
having an address of and office at 100 Federal Street, Boston, Massachusetts
02110 ATTN: Real Estate Department-Amy Weinstock and also having an office at
115 Perimeter Center Place N.E., Suite 500, Atlanta, Georgia 30346 ATTN: John
Pearson (hereafter referred to as "Purchaser").

                                   WITNESSETH:


         Whereas, Seller is the owner of the Receivables (as defined in Section
1.01 below) created by the sale of building lots in the Subdivision Project (as
defined in Section 1.01 below) and by the sale of timeshare interests under
deeds, Agreements for Deed (as defined in Section 1.01 below) and Right to Use
Agreements (as defined in Section 1.01 below) in the Timeshare Project (as
defined in Section 1.01 below); and

         Whereas, on the Initial Closing Date, Seller desires to sell, transfer,
assign and convey to Purchaser the Receivables set forth on Schedule A hereto
and on the Subsequent Closing Date Seller desires to sell, transfer, assign and
convey to Purchaser additional Receivables to be identified after the Initial
Closing Date; and

         Whereas, Purchaser desires to purchase from Seller on the Initial
Closing Date and on the Subsequent Closing Date, the Receivables, on the terms
and conditions set forth in this Agreement; and

         Whereas, Seller has agreed in connection with and in partial
consideration for the purchase by Purchaser of the Receivables to continue to
service the Receivables; and

         Whereas, Purchaser has requested that Seller continue to service the
Receivables on the terms and conditions set forth in this Agreement.

         Now therefore, in consideration of the premises and mutual agreements
herein contained, Seller and Purchaser agree as follows:



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                                   ARTICLE I.

                                   Definitions

         Section 1.01 Definitions. Whenever in this Agreement the following
words and phrases are used, unless the context otherwise requires, such words
and phrases shall have the meaning ascribed to them as set forth below:

         "Accrued Interest" on a Receivable means that amount of interest
accrued on the Principal Balance of such Receivable but not paid by or on behalf
of the Obligor as of such date.

         "Affiliate" when used with respect to any person or entity, shall mean
any other person or entity which, directly or indirectly, controls or is
controlled by or is under common control with such person. For purposes of this
definition "control" including the correlative meanings of the terms "controlled
by" and "under common control with", with respect to any person, shall mean
possession, directly or indirectly of the power to direct or cause the direction
of the management and policies of such person, whether through the ownership of
voting securities or by contract or otherwise.

         "Agency Agreement" shall mean that certain Agency Agreement dated as of
May 30, 1997 among Seller, Purchaser and Custodian as the same may be amended or
modified from time to time, and any agreement entered into in replacement
therefor.

         "Agent" means Bank of America, NT & SA, a banking corporation or its
successors or assigns which shall act as Agent for Purchaser under the Agency
Agreement.

         "Agreement" means this Purchase and Servicing Agreement, as amended or
modified from time to time.

         "Agreement for Deed" means a written agreement for the purchase and
sale of a timeshare interest in the Timeshare Project, under which Seller is the
vendor thereunder, providing for delivery of a deed to the vendee thereunder to
the related Financed Property upon payment and performance of the Obligor's
obligations as vendee thereunder.

         "Amount Financed" in respect of a Receivable means the original amount
advanced under the Receivable toward the purchase price of the Financed Property
and related costs.

         "Annual Percentage Rate" of a Receivable means the annual rate of
interest stated in the Receivable for purposes of the Federal Truth In Lending
disclosure stated therein, which may differ from the contract rate stated
therein.



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         "Business Day" means a day other than a Saturday, Sunday or other day
on which Purchaser is not open for transaction of substantially all of its
banking functions or a day other than when banks in Las Vegas, Nevada are
authorized or required by law or regulation to close.

         "Closing Date" means the Initial Closing Date and/or the Subsequent
Closing Date as applicable to the context in which the term is used.

         "Collected Interest" means the portion of all payments received (from
whatever source including all late fees and other administrative fees or
payments received on any Receivable) during a Collection Period from Receivables
that is allocable to interest pursuant to the terms of such Receivable.

         "Collected Principal" means the portion of all payments received (from
whatever source) during a Collection Period on a Receivable that is allocable to
principal pursuant to the terms of such Receivable.

         "Collection Period" means each calendar month until this Agreement
shall terminate pursuant to Article VIII.

         "Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more persons
or entities of the amounts signified by such term for all such persons or
entities determined on a consolidated basis in accordance with generally
acceptable accounting principles.

         "Credit and Collection Policies" shall mean the credit and collection
policies of Seller set forth on Schedule B hereto.

         "Custodian" shall mean Bank of New York or its successors or assigns,
which shall act as custodian and bailee for Purchaser under the Custodial
Agreement.

         "Custodial Agreement" means the Custodial Agreement dated May 30, 1997
among Seller, Purchaser and Custodian as the same may be amended or modified
from time to time and any agreement entered into in replacement therefor.

         "Custodian Receivable File" means the documents specified in
Section 2.06(a).

         "Cutoff Date" means, for the Initial Closing Date, April 30, 1997 and
for the Subsequent Closing Date the close of business on a date specified as the
Cutoff Date by Seller and agreed to by Purchaser with respect to the purchase by
Purchaser from Seller of a Pool.



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         "Deed of Trust Agreement" means a written agreement for the purchase
and sale of Financed Property in the Timeshare Project or the Subdivision
Project under which Seller conveys title thereto to the Obligor with the unpaid
purchase price therefor evidenced by a promissory note and secured by a deed of
trust or mortgage on the related Financed Property in favor of Seller.

         "Defaulted Receivable" means a Receivable (a) as to which Seller has
knowledge that a bankruptcy or insolvency of any Obligor under the Receivable
has occurred or that eventual payment in full is unlikely, or (b) in respect of
which any principal or interest due thereunder is 90 days or more overdue as
determined in accordance with the Credit and Collection Polices, or (c) in
respect of which payments have been rescheduled or extended or other terms have
been modified or waived within the one-year period preceding the Cutoff Date
with respect to such Receivable, or (d) in respect of which Seller shall have
taken any steps to realize upon such Receivable pursuant to Section 3.03, or (e)
in respect of which any action is taken to enforce or perfect any other Lien on
the related Financed Property including those arising from applicable Taxes or
assessments, or (f) at the option of Purchaser, any event of default by the
Obligor under the Receivable, which event is known to Seller (other than a
default under (b) above) has occurred and remains uncured for more than fourteen
(14) months, including any failure to pay applicable Taxes or assessments
(whether or not expressly required under the terms of the Receivable), or (g) as
to which the Obligor has exercised any right to exchange the Financed Property
for other property or is otherwise released from Obligor's obligations under any
Receivable by Seller, including any Receivable in respect of which an upgrading
or downgrading contract is entered into as contemplated by Section 3.06(a) or
(h) for which a Custodian Receivable File has been delivered to Custodian and
there shall be missing items in such file as shall be identified on an exception
list as is more particularly set forth in Section 1.2 of the Custodial
Agreement, which items shall not have been furnished within thirty (30) days
after delivery of such Custodian Receivable File unless Purchaser shall have
waived the furnishing of such items or consented to the Receivable not being
designated as a Defaulted Receivable; and which, in the case of each of clauses
(a) through (h), shall not have been repurchased from Purchaser by or on behalf
of Seller or replaced pursuant to Section 4.02.

         "Distribution Date" means the third Business Day after the
Report Date for each Collection Period.

         "Event of Transfer" means any event or condition specified
in Section 7.01.



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         "Financed Property" means, in respect of a Receivable, the land in the
case of a Land Receivable, or the timeshare interest or right to use interest in
the case of a Timeshare Receivable, together with all hereditaments and
appurtenances thereto, securing (or as to which title is retained to secure) an
Obligor's indebtedness under such Receivable.

         "Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles applied on a consistent basis.

         "Guarantor" shall mean Mego Financial Corp., a New York corporation,
which owns all of the issued and outstanding capital stock of Seller.

         "Guaranty Agreement" means that certain Guaranty Agreement, dated as of
May 30, 1997, by Guarantor in favor of Purchaser, as the same may be amended or
modified from time to time.

         "Initial Closing Date" means May 30, 1997.

         "Land Receivable" means a Receivable arising from the sale of land in
the Subdivision Project by the Seller.

         "Lien" means a security interest, lien, title retention arrangement,
charge, pledge, preference or encumbrance of any kind, including tax liens,
mechanics' liens and any liens that attach by operation of law.

         "Minimum Reserve Account Amount" means as of the Cutoff Date and on
each subsequent Record Date an amount equal to 5% of the Pool on each such date.

         "Obligor" means the purchaser or the co-purchasers of the Financed
Property purchased in part or in whole by the execution and delivery of such
Receivable, or any other Person who owes or may be liable for payments under
such Receivable.

         "Opinion of Counsel" means a written opinion of independent
counsel acceptable to the Purchaser.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.



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         "Pool" means the aggregate outstanding Principal Balance of the
Receivables purchased by Purchaser on the Initial Closing Date and the aggregate
outstanding Principal Balance of the Receivables purchased by Purchaser on the
Subsequent Closing Date and thereafter the aggregate outstanding Principal
Balance of the Receivables purchased by Purchaser on each of the Closing Dates
less the Principal Balance of Defaulted Receivables plus the Principal Balance
of Replacement Receivables calculated separately for each such Pool purchased.

         "Principal Balance" of a Receivable, as of any date means the Amount
Financed minus that portion of all payments received prior to such date
allocable to principal of such Receivable.

         "Purchaser" means BankBoston, N.A., a national banking association and
its successors and assigns (but such term shall not include any Person
repurchasing Receivables pursuant to the terms of this Agreement).

         "Receivable" means an installment contract (which shall be either a
Deed of Trust Agreement or an Agreement for Deed or a Right to Use Agreement)
entered into between Seller and an Obligor in respect of Financed Property which
installment contract is purchased by Purchaser from Seller or is collaterally
assigned by Seller to Purchaser to constitute all or a portion of the Reserve
Account, pursuant to this Agreement, and includes all promissory notes,
mortgages, deeds of trust, land contracts, agreements for deed and other
property, right, title and interest conveyed pursuant to Section 2.01. A
Receivable repurchased by or on behalf of Seller or replaced pursuant to Section
4.02, shall be removed and shall not thereafter be deemed a Receivable for
purposes of this Agreement. Each Replacement Receivable assigned by Seller
pursuant to Section 4.02 shall be included in the Pool and thereafter be deemed
a Receivable for all purposes of this Agreement.

         "Receivable Files" means the documents specified in Section
2.06(a) and (b).

         "Record Date" means the last day of a Collection Period.

         "Replacement Receivable" means a Receivable assigned to Purchaser by
Seller pursuant to Section 4.02 in replacement of a Defaulted Receivable.

         "Replacement Request" means each request by Seller that
Purchaser accept Replacement Receivables pursuant to Section
4.02.

         "Report Date" means for each Collection Period the fifteenth calendar
day of the month following each Collection Period.



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         "Repurchase Amount" of any Receivable means, as of a Record Date, the
Principal Balance thereof.

         "Reserve Account" means the account established pursuant to Section
5.01.

         "Reserve Account Balance" shall mean the balance of the Reserve Account
at any time.

         "Right To Use Agreement" means a written agreement wherein installment
payments are due by the Obligor thereunder for the right to use a specified
accommodation or type of accommodation for a stated period of time on either a
fixed period or floating, discretionary period basis at the Timeshare Project
under which the Seller is the grantor.

         "Servicer Receivable File" means the documents specified in
Section 2.06(b).

         "Subdivision Project" means the Calvada Valley Subdivision, the Calvada
North Subdivision, the Calvada Meadows Subdivision, the Country View Estates
Subdivision, the Golden Spring Ranch Subdivision (Units No. 1-8 inclusive), the
Vegas Acres Subdivision (Unit No.2), the Calvada 9B Subdivision, and the Country
Place II Subdivision projects located in Nye County, Nevada, which comprise a
part of the Calvada subdivisions, for which Seller has acted as the seller of
lots therein.

         "Subsequent Closing Date" means any date up to and including October
24, 1997 as is agreed to be the Subsequent Closing Date by Purchaser and Seller,
upon which date Purchaser acquires title to a Pool of Receivables.

         "Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other subsidiaries of such
person or by any combination thereof, provided, however, that for purposes of
this Agreement no New York corporations which, on the date of this Agreement,
would otherwise constitute Subsidiaries, shall be deemed Subsidiaries.

         "Tangible Net Worth" of any person or entity shall mean, as of any
date, (a) the amount of any capital stock, paid in capital and similar equity
accounts plus (or minus in the case of a deficit) the capital surplus and
retained earnings of such person



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or entity and the amount of any foreign currency translation adjustment account
shown as a capital account of such person or entity, less (b) the net book value
of all items of the following character which are included in the assets of such
person or entity: (i) good will, including without limitation, the excess of
cost over book value of any asset, (ii) organization or experimental expenses,
(iii) unamortized debt discount and expense, (iv) patents, trademarks, trade
names and copyrights, (v) treasury stock, (vi) deferred taxes and deferred
charges, (vii) franchises, licenses and permits, and (viii) other assets which
are deemed intangible assets under generally accepting accounting principles,
provided, however, that, notwithstanding the foregoing, no deduction shall be
made pursuant to clause (b) in respect of any asset presently shown on the
balance sheet of the Seller as "Deferred Selling Expense" as determined in
accordance with generally accepted accounting principles.

         "Taxes" mean real property taxes and assessments, and other similar
fees and taxes relating to a Financed Property.

         "Timeshare Project" means the White Sands Waikiki Resort Club located
in the metropolitan area of Honolulu, Hawaii which has been dedicated to
timeshare ownership by Seller pursuant to White Sands Waikiki Resort Club Notice
of Timeshare Plan filed in the Office of Assistant Registrar of the Land Court
of the State of Hawaii as Document No. 1205652, and the Reno Spa Resort Club
located in the metropolitan area of Reno, Nevada which has been dedicated to
timeshare ownership by Seller pursuant to Declaration of Timeshare Ownership
Covenants, Conditions and Restrictions recorded in the Official Records of
Washoe County, Nevada on April 18, 1984 in Book 2002 at Page 0651 as Document
No. 919447, and the Brigantine Villas located in the metropolitan area of
Atlantic City, New Jersey which has been dedicated to timeshare ownership by
Seller pursuant to Declaration of Conditions, Covenants and Restrictions
recorded in the Office of the Clerk of Atlantic County in Book 4731 of Deeds at
Page 134, and the Brigantine Inn Resort Club located in the metropolitan area of
Atlantic City, New Jersey which has been dedicated to timeshare ownership by
Seller pursuant to Declaration of Conditions, Covenants and Restrictions
recorded in the Office of the Clerk of Atlantic County in Book 4057 of Deeds at
Page 1, and the Grand Flamingo Villas resort located in the metropolitan area of
Las Vegas, Nevada which has been dedicated to timeshare ownership by Seller
pursuant to Declaration of Timeshare Ownership Covenants, Conditions and
Restrictions recorded in the Official Records of Clark County, Nevada on
November 10, 1983 in Book 1832 as Document No. 1791580, and the Grand Flamingo
Towers resort located in the metropolitan area of Las Vegas, Nevada which has
been dedicated to timeshare ownership by Seller pursuant to Declarations of
Timeshare Ownership Covenants, Conditions and Restrictions recorded in the
Official Records of Clark County, Nevada on August 23, 1984 in Book 1978 as
Document



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No. 1937487, and the Grand Flamingo Terraces resort located in the metropolitan
area of Las Vegas, Nevada which has been dedicated to timeshare ownership by
Seller pursuant to Declaration of Timeshare Plan Ownership Covenants, Conditions
and Restrictions recorded in the Official Records of Clark County, Nevada on
December 12, 1989 in Book 891212 as Document No. 00188, and the Grand Flamingo
Suites resort located in the metropolitan area of Las Vegas, Nevada which has
been dedicated to timeshare ownership by Seller pursuant to Declaration of
Timeshare Ownership Covenants, Conditions and Restrictions recorded in the
Official Records of Clark County, Nevada on November 8, 1991 in Book 911108 as
Document No. 00235, and the Grand Flamingo Winnick resort located in the
metropolitan area of Las Vegas, Nevada which has been dedicated to timeshare
ownership by Seller pursuant to Declaration of Timeshare Ownership Covenants,
Conditions and Restrictions recorded in the Official Records of Clark County,
Nevada on March 19, 1993 in Book 930319 as Document No. 00051, and the Grand
Flamingo Fountains resort located in the metropolitan area of Las Vegas, Nevada
which has been dedicated to timeshare ownership by Seller pursuant to
Declaration of Timeshare Ownership recorded in the Official Records of Clark
County, Nevada on May 26, 1983 in Book 930526 as Document No. 00566 and the
Aloha Bay, A Condominium-Indian Shores resort located in Indian Shores, Florida
which has been dedicated to timeshare ownership by Seller pursuant to a
Declaration of condominium for Aloha Bay, A Condominium recorded in the Official
Records Book of Pinellas County Florida as Instrument #96-266636 in Book 9477 at
Page 1645 and the Suites at Steamboat resort located in Steamboat Springs,
Colorado which has been dedicated to timeshare ownership by Steamboat Suites,
Inc., a subsidiary of Seller pursuant to an Amended and Restated Condominium
Declaration with Timeshare Ownership Covenants, Conditions and Restrictions for
The Suites at Steamboat, a Condominium recorded in the official records of Routt
County as Instrument #446385 on March 22, 1995 in Book 706 at page 337.

         "Timeshare Receivable" means a Receivable arising from the sale of a
timeshare interest by Seller, whether in fee or by a Right to Use Agreement in
the Timeshare Project.

         "Trust Agreements" shall mean (a) that certain Amended, Restated and
Consolidated Trust Agreement-Grand Flamingo Towers, dated as of March 19, 1990,
among Valley Bank of Nevada (now known as Bank of America NT & SA), as trustee,
Vacation Spa Resorts, a Tennessee corporation, whose existence ceased upon
merger into Seller on March 11, 1993 and the Grand Flamingo Owners Association,
(b) that certain Amended, Restated and Consolidated Trust Agreement-Grand
Flamingo Villas, dated as of March 19, 1990, among Valley Bank of Nevada (now
known as Bank of America NT & SA), as trustee, Vacation Spa Resorts, a Tennessee
corporation, whose existence ceased upon merger into Seller on March 11, 1993
and the Grand Flamingo Villas Owners Association,



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(c) that certain Trust Agreement-Grand Flamingo Terraces, dated as of December
8, 1989, among Valley Bank of Nevada (now known as Bank of America NT & SA), as
trustee, Seller and Grand Flamingo Terraces Owners Association and (d) that
certain Trust Agreement dated November 13, 1991 between Valley Bank of Nevada
(now known as Bank of America NT & SA) and Seller with reference to the property
known as the Grand Flamingo Suites.

         "Trustee" shall mean Bank of America NT & SA, a Nevada banking
corporation, in its capacity as trustee under the Trust Agreements, and any
successor to any of its rights and duties under the Trust Agreements.

         "UCC" means the Uniform Commercial Code as in effect in a
respective jurisdiction.

         SECTION 1.02 Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to a writing include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation".

          SECTION 1.03 Simple Interest Method. All allocations of payments to
principal and interest and determinations of periodic charges and the like shall
be made using the simple interest method, based on the actual number of days
elapsed and the actual number of days in the calendar year. Each payment on a
Receivable shall be applied first to the amount of late payment charges or
similar fees or reimbursable advances not included in the Amount Financed, then
to interest accrued on such Receivable to the date of receipt and then to reduce
the principal amount outstanding on the Receivable.



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                                   ARTICLE II

                                 The Receivables

         SECTION 2.01 Conveyance of Receivables. In consideration of the payment
of the purchase price by Purchaser pursuant to Section 2.02, on the Initial
Closing Date and on the Subsequent Closing Date, Seller hereby agrees to sell,
transfer, assign, and otherwise convey to Purchaser without recourse (but
subject to Seller's obligations herein) the following:

                  (i) The Receivables listed in Schedule A to this Agreement
                  (and on the Subsequent Closing Date the Receivables listed on
                  Schedule A-1 to be attached to this Agreement) together with
                  all monies paid thereon on or after the Cutoff Date and all
                  monies due and to become due thereon on or after the Cutoff
                  Date and all other rights and claims arising thereunder or
                  related thereto;

                  (ii) All right, title and interest of Seller in any promissory
                  notes or other instruments or agreements evidencing the
                  indebtedness of the Obligors under such Receivables and all
                  rights of payment thereunder;

                  (iii) All right, title and interest of Seller in the liens,
                  security interests and other legal and beneficial rights and
                  claims in and to the related Financed Property, including
                  those arising or held under any related mortgages, deeds of
                  trust, land contracts, Agreements for Deed, Right to Use
                  Agreement and trust agreements (including the Trust
                  Agreements) pertaining to any such Financed Property;

                  (iv) All right, title and interest of Seller in any proceeds
                  of any physical damage and title insurance policies
                  attributable to such Financed Property and in any proceeds of
                  any mortgage, credit life, accident, health and disability and
                  hospitalization insurance policies covering any such
                  Receivables or any Obligor with respect thereto;

                  (v)   All right, title and interest of Seller in any
                  recourse to others for payment of or relating and
                  attributable to such Receivables;

                  (vi) All right, title and interest of Seller in any
                  collateral, guaranty or other credit support that shall secure
                  any of such Receivables and in any deposits, impounds, and
                  other funds that may be payable from time to time to holders
                  of such Receivables;



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                  (vii) All accounts, contract rights, general intangibles,
                  instruments or documents evidencing, arising out of or
                  relating and attributable to such Receivables;

                  (viii) All right, title and interest of Seller in all files,
                  documents, surveys, certificates, correspondence, appraisals,
                  computer programs, tapes, disks, cards, accounting records and
                  other books, records, information and data of Seller
                  pertaining to such Receivables;

                  (ix) All right, title and interest of Seller relating and
                  attributable to such Receivables or such Financed Property not
                  otherwise described in this Section 2.01; and

                  (x)    All proceeds of the foregoing (including
                  insurance and condemnation proceeds).

         It is expressly acknowledged that the foregoing does not include an
assignment of any property of any owners association for the Timeshare Project.

         SECTION 2.02 Payment of Purchase Price: Conditions Precedent.

         (a) On the Initial Closing Date, Purchaser will purchase up to Ten
Million ($10,000,000) Dollars of Receivables in the aggregate in substantially
equal amounts of Land Receivables and Timeshare Receivables from Seller. The
Receivables which Purchaser has agreed to purchase as of the Initial Closing
Date are set forth on Schedule A to this Agreement and shall be subject to the
terms and conditions of this Agreement on the Closing Date.

         In addition, Purchaser has agreed to purchase of up to Ten Million
($10,000,000) Dollars of Receivables in the aggregate on the Subsequent Closing
Date, which shall occur on or before the Cutoff Date, in substantially equal
amounts of Land Receivables and Timeshare Receivables from Seller on such
Subsequent Closing Date. The Receivables to be purchased by Purchaser on the
Subsequent Closing Date shall be acceptable in all respect to Purchaser and
shall be set forth, on or before the Subsequent Closing Date, on a Schedule A-1
to be appended to this Agreement with such subsequent purchase being subject to
the terms and conditions of this Agreement.



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<PAGE>   13
         (b) Purchaser agrees, subject to the terms and conditions of this
Agreement, to pay on the Closing Date, as the purchase price for the conveyance
of such Receivables, the amount of the Pool.

         (c) Unless waived by Purchaser, the obligation of Purchaser to pay the
purchase price is subject to receipt by Purchaser of the following documents and
completion of the following matters, all in form, scope and substance
satisfactory to Purchaser in its sole discretion:

                  (i) Articles of Incorporation; Etc. Certificates of recent
                  date of the appropriate authority or official of Nevada for
                  Seller and New York for Guarantor listing all charter
                  documents of Seller and Guarantor on file in that office and
                  certifying as to the respective good standing and corporate
                  existence of Seller and Guarantor, together with copies of
                  such charter documents of Seller and Guarantor certified as of
                  a date acceptable to Purchaser by such authority or official
                  and certified as true and correct as of the Closing Date by a
                  duly authorized officer of Seller and Guarantor respectively;

                  (ii) By-Laws; Resolutions. Copies of the By-Laws of Seller and
                  Guarantor together with all authorizing resolutions and
                  evidence of other corporate action taken by Seller and
                  Guarantor to authorize the execution, delivery and performance
                  by Seller and Guarantor of this Agreement and the Guaranty
                  Agreement, as the case may be and the consummation of the
                  transactions contemplated hereby, certified as true and
                  correct as of the Closing Date by a duly authorized officer of
                  Seller and Guarantor respectively;

                  (iii) Officer's Certificates. Certificates of incumbency of
                  Seller and Guarantor containing, and attesting to the
                  genuineness of, the signatures of those officers authorized to
                  act on behalf of Seller and Guarantor in connection with this
                  Agreement and the Guaranty Agreement, as the case may be, and
                  the consummation of the transactions contemplated hereby,
                  certified as true and correct as of the Closing Date by a duly
                  authorized officer of Seller and Guarantor respectively;



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<PAGE>   14
                  (iv) Assignment of Receivables. A blanket assignment with
                  respect to the Receivables listed on Schedule A and Schedule
                  A-1 deemed by Purchaser to be acceptable for purchase, duly
                  executed and delivered by Seller, together with endorsement by
                  Seller (and all prior holders) of all promissory notes and
                  other instruments evidencing any Receivable (or satisfactory
                  arrangements therefor) and assignment of the Right to Use
                  Agreement, deed of trust, mortgage or Agreement for Deed
                  executed by the Obligor to secure any Receivable sufficient to
                  assign the right, title and interest of Seller thereunder of
                  record to Purchaser and evidence that no prior holder has any
                  right, title or interest in or to any of the Receivables;

                  (v) Perfection of Assignment. Evidence of the due execution
                  and delivery of, and the recordation and filing of, and other
                  action (including payment of any applicable taxes or fees) in
                  connection with, assignments of deeds of trust, assignments of
                  mortgages, Agreements for Deed, financing statements and
                  similar documents which Purchaser deems necessary or desirable
                  to create, to preserve or perfect the right, title and
                  interest in such Receivables intended to be granted to
                  Purchaser hereunder in such jurisdictions as Purchaser may
                  deem necessary or appropriate, together with (i) such title
                  insurance and UCC record searches in such offices as Purchaser
                  may request and (ii) a receipt for the applicable Custodian
                  Receivable Files to be retained by the Custodian pursuant to
                  Section 2.06 and confirmation that all such Receivables have
                  been endorsed in blank (or satisfactory arrangements made
                  therefor) and contain no legends, notations or indications of
                  claims of others (or satisfactory arrangements for
                  cancellation thereof);

                  (vi) Other  Agreements.  The Custodial Agreement, the
                  Agency Agreement and Guaranty Agreement duly executed
                  and delivered by the parties thereto;



                                       14

<PAGE>   15
                  (vii) Lockbox and Reserve Account. The Reserve Account shall
                  have been established as provided in Section 5.01; in an
                  amount which, together with any cash amounts then held in the
                  Reserve Account, is not less than the Minimum Reserve Account
                  Amount. The lock box account contemplated by the Custodial
                  Agreement shall have been established with the Custodian and
                  undertakings requested by Purchaser shall have been received
                  from any prior holders of such Receivables regarding delivery
                  of any payments thereon to Purchaser;

                  (viii) Opinion of Counsel. The favorable written opinion of
                  Lionel, Sawyer & Collins as counsel for Seller and an opinion
                  of counsel for Guarantor with respect to such matters as
                  Purchaser may reasonably request;

                  (ix) Representation and Warranties: No Event of Transfer. The
                  representations and warranties contained in Section 2.03 and
                  6.01 hereof and in Section 5 of the Guaranty Agreement shall
                  be true and correct on and as of the Closing Date and no Event
                  of Transfer or no event or condition which might become such
                  an Event of Transfer with notice or lapse of time, or both,
                  shall exist or shall have occurred and be continuing on the
                  Closing Date and Purchaser shall have received a certificate
                  to such effect certified as true and correct as of the Closing
                  Date by a duly authorized officer of Seller and Guarantor
                  respectively;

                  (x) Consumer and Project Documents. Purchaser shall have
                  received copies of (A) the forms of all contract documents,
                  disclosures, applications and related documentation utilized
                  in originating the Receivables, (B) the declarations of
                  covenants, conditions and restrictions for the Timeshare
                  Project, (C) the articles of incorporation, by-laws and the
                  rules and regulations of the owners associations for the
                  Timeshare Project; and (D) all other related documents,
                  including association budgets, assessment information, the
                  property reports and public offering statements filed with the
                  Department of Housing and Urban Development and the Nevada
                  Division of Real Estate with respect to the Subdivision
                  Project, the Trust Agreements, property reports and public
                  offering statements filed with the Nevada, Florida and
                  Colorado Divisions of Real Estate with respect to the
                  Timeshare Project, and evidence that the declarations of
                  covenants for the Subdivision Project and the Timeshare
                  Project have been duly recorded in accordance with



                                       15

<PAGE>   16
                  applicable law, each certified as true and correct as
                  of the Closing Date by a duly authorized officer of
                  Seller;

                  (xi) Management and Other Agreements. If requested by
                  Purchaser at any time, a list of all material management,
                  maintenance, service, supply, employment and other contracts
                  in effect with respect to the management and operation of the
                  Timeshare Project, together with copies thereof certified as
                  true and correct as of the Closing Date by a duly authorized
                  officer of Seller;

                  (xii) Timeshare Exchange. If requested by Purchaser at any
                  time, a copy of all contracts with Resort Condominiums
                  International relating to the Timeshare Project and evidence
                  that the Timeshare Project is in good standing and the owners
                  of timeshare interests therein are eligible to purchase
                  memberships in and thereby to enjoy exchange privileges
                  through such organization;

                  (xiii) Zoning. Etc. If requested by Purchaser at any time,
                  evidence satisfactory to Purchaser that the Timeshare Project
                  and the Subdivision Project each complies with all applicable
                  covenants, restrictions, zoning, development, building, use
                  and similar laws, ordinances and codes and that adequate
                  utilities and access are available, including certificates of
                  occupancy and/or use;

                  (xiv) Statutory Compliance. Evidence as Purchaser may request
                  at any time that the Timeshare Project complies with
                  applicable provisions of applicable law, including any
                  regulatory permits issued thereunder, and that the Subdivision
                  Project is in compliance with Chapter 278 and 119 of the
                  Nevada Revised Statutes and Seller is in compliance with all
                  applicable provisions of the Federal Interstate Land Sales
                  Act, and all other applicable laws affecting the sale of
                  interests in the Timeshare Project or the Subdivision Project;

                  (xv) Insurance. Evidence of appropriate liability and casualty
                  insurance covering the Timeshare Project and, if applicable,
                  the Subdivision Project, including standard mortgagee clauses
                  and such other endorsements and coverages as Purchaser may
                  request, issued by companies, in amounts, and upon other terms
                  satisfactory to Purchaser, which insurance without limitation
                  will be in an amount not less than the full insurable value of
                  the related property;



                                       16

<PAGE>   17
                  (xvi) Surveys/Plats. An as-built survey of the Timeshare
                  Project and plat of the Subdivision Project, together with a
                  certificate of the surveyor stating that no portion of the
                  Timeshare Project and a certificate of Seller or satisfactory
                  alternative evidence that no portion of the Subdivision
                  Project is located in a flood hazard area designated by the
                  Federal Emergency Management Agency or, if located in such an
                  area, evidence of flood insurance;

                  (xvii) Environmental Matters. Copies of such environmental
                  assessments and analyses prepared by such environmental
                  consultants and otherwise acceptable to Purchaser as Purchaser
                  may request with respect to the Timeshare Project and the
                  Subdivision Project; and

                  (xviii) Prior Transaction Cross Default and Collateralization.
                  Seller and Purchaser shall have entered into such agreements
                  as are deemed necessary by Purchaser to have any and all
                  reserve account amounts existing from time to time, under the
                  portfolio purchases by Purchaser from Oxford Finance Company
                  effected on or about December 31, 1992 and under a portfolio
                  purchase of July 6, 1994 and under a portfolio purchase of
                  August 31, 1995, granted as additional collateral security to
                  Purchaser to secure the payment and performance of Sellers
                  obligations under this Agreement.

                  (xix) Miscellaneous. Delivery of such other documents and
                  completion of such other matters as Purchaser may reasonably
                  request.

         SECTION 2.03 Representations and Warranties of Seller. Seller hereby
makes the following representations and warranties to Purchaser on which
Purchaser will rely in purchasing the Receivables or in accepting an assignment
of Replacement Receivables pursuant to Section 4.02. Such representations and
warranties shall speak as of the Closing Date (or the immediately preceding
Record Date, in the case of Replacement Receivables assigned pursuant to Section
4.02), unless otherwise specified, and shall survive the sale, transfer and
assignment of the Receivables to Purchaser. For purposes of the following
representations and warranties made with respect to any Replacement Receivables,
references to Cutoff Date and Closing Date shall be deemed references to the
immediately preceding Record Date.



                                       17

<PAGE>   18
                  (i) Receivable Term. Each receivable conveyed to the Purchaser
                  shall have a remaining term to maturity of not greater than
                  117 months.

                  (ii) Annual Percentage Rate. Each Receivable conveyed hereby
                  shall have an Annual Percentage Rate equal to or greater than
                  9.5%. As of the Cutoff Date, the weighted average Annual
                  Percentage Rate of the Receivables is not less than 9.75%.

                  (iii) Characteristics of Receivables. Each Receivable (a)
                  shall have been originated by Seller in the States of Nevada,
                  Hawaii, California, Colorado, Florida or New Jersey for the
                  original retail sale of the related Financed Property in the
                  ordinary course of Seller's business, and shall have been
                  fully and properly executed by the parties thereto, (b) all
                  Timeshare Receivables identified in Schedule A or Schedule A-1
                  to this Agreement as arising from sales of Financed Property
                  in the White Sands Timeshare Development constitute Right to
                  Use Agreements and in the Reno Spa, Grand Flamingo Villas and
                  Grand Flamingo Towers Timeshare Developments constitute
                  Agreements for Deed and all other Receivables constitute Deed
                  of Trust Agreements, (c) in the case of the Land Receivables,
                  the Financed Property was unimproved at the time of sale and
                  comprises single family residential lots (except as otherwise
                  specified in Schedule A or Schedule A-1), (d) shall contain
                  customary and enforceable provisions such that the rights and
                  remedies of the holder thereof shall be adequate for
                  realization against the Financed Property of the benefits of
                  the lien or vendor's interest, and in the case of Receivables
                  constituting Deed of Trust Agreements, shall be eligible for
                  summary remedies in lieu of judicial foreclosure proceedings
                  and, in the case of those Timeshare Receivables constituting
                  Agreements for Deed, the holder shall be entitled to terminate
                  such agreement after default and reasonable notice to the
                  Obligor, and to retain all payments made without necessity for
                  legal proceedings to obtain marketable title to the related
                  Financed Property, and in the case of all Receivables no
                  Obligor shall be entitled to recover or obtain any rebate of
                  amounts previously paid in respect of such Receivable, (e)
                  shall provide for level monthly payments (excepting the final
                  monthly payment thereon which may be a lesser amount than such
                  level monthly payments) in US dollars by the related Obligor,
                  who is a natural person and is a citizen and resident, at the
                  time of origination, of one of the United States or Canada,
                  provided, that up



                                       18

<PAGE>   19
                  to twelve (12%) of the portion of the aggregate Pool
                  attributable to Receivables may be from citizens and residents
                  of countries other than the United States if all other
                  conditions of this Section 2.03 and this Subsection of each of
                  such Receivables are complied with, but not more than ten
                  (10%) percent of such Receivables where the Obligor is a
                  citizen or resident of a country other than the United States
                  shall be from citizens and/or residents of Canada, (f)
                  pursuant to which all payments may properly be applied on a
                  Receivable first to any late payment charges or similar fees
                  or reimbursable advances not included in the Amount Financed,
                  then to the amount of interest accrued on such Receivables to
                  the date of receipt and then to reduce the principal amount
                  outstanding on the Receivable, and such allocations of
                  payments to such amounts may properly be applied in accordance
                  with the simple interest method described in Section 1.03, (g)
                  shall be on the applicable forms of Seller delivered to
                  Purchaser pursuant to Section 2.02(c)(x), and such forms
                  comprise all of the agreements entered into with the Obligors
                  relating to the Receivable and the Financed Property (except
                  for agreements arising from the confirmation of reservations
                  for occupancy of the Timeshare Project in the ordinary course
                  of business), (h) shall be originated to an individual
                  consumer end user of the Financed Property and shall not
                  constitute except in the case of the White Sands Timeshare
                  Development a "Vacation Resort Assurance Certificate" or other
                  "right to use" interest in the case of the Timeshare Project,
                  (i) shall require that the Obligor pay all applicable Taxes in
                  the case of the Land Receivables and, under the declarations
                  of covenants for the Timeshare Project (other than the White
                  Sands resort), the Obligors under the Timeshare Receivables
                  (other than the White Sands resort) are required to pay
                  assessments to provide for payment of all applicable Taxes,
                  maintenance and physical damage insurance covering the
                  Financed Property, (j) shall have not been repurchased by
                  Seller pursuant to an agreement providing for the sale of
                  receivables (except as otherwise specified in Schedule A or
                  Schedule A-1), (k) shall have complied at the time of
                  origination with the Credit and Collection Policies of Seller
                  set forth in Schedule B hereto, (l) is not subject to any
                  unexpired rescission or similar right under law or otherwise,
                  (m) shall be a contract which has a paid in equity of not less
                  than ten (10%) percent of the original sale price which sum
                  has been paid in cash to Seller except in the case of a
                  Replacement Receivable which results from a trade up or down
                  and shall have a paid in equity of not less than ten (10%)
                  percent of the original sale price



                                       19

<PAGE>   20
                  of the original contract and the Obligor under such Receivable
                  shall not at the time of transfer to Purchaser of such
                  Receivable be greater than thirty (30) days delinquent in
                  payment of principal and interest without the prior consent of
                  Purchaser and if any such Receivable is accepted, the Obligor
                  of such Receivable must make a regular monthly payment of
                  principal and interest within thirty (30) days of the Cutoff
                  Date or such Receivable will be deemed a Defaulted Receivable,
                  (n) shall contain a requirement for periodic payments of at
                  least monthly frequency in equal amounts of principal and
                  interest providing for a complete amortization of the
                  principal and interest obligation represented by the
                  Receivable over the initial contract term, and (o) shall have
                  an Obligor who has not had filed against such Obligor or is
                  not on the Cutoff Date the subject of a voluntary or
                  involuntary Chapter 7, 11 or 13 bankruptcy petition or
                  proceeding.

                  (iv) Schedule of Receivables. Schedule A to this Agreement
                  lists all of the Receivables being purchased on the Initial
                  Closing Date and the information set forth in Schedule A shall
                  be true and correct in all material respects as of the close
                  of business on the Cutoff Date and no selection procedures
                  materially adverse to Purchaser shall have been utilized in
                  selecting the Receivables from all receivables owned by Seller
                  which meet the selection criteria specified in this Agreement.
                  Schedule A-1 to this Agreement lists all of the Receivables
                  being purchased on the Subsequent Closing Date and the
                  information set forth in Schedule A-1 shall be true and
                  correct in all material respects as of the close of business
                  on the Cutoff Date and no selection procedures materially
                  adverse to Purchaser shall have been utilized in selecting the
                  Receivables from all receivables owned by Seller which meet
                  the selection criteria specified in this Agreement.

                  (v) Compliance with Law. Each Receivable and each sale of the
                  related Financed Property shall have complied at the time it
                  was originated or made, and shall comply at the Cutoff Date,
                  with all applicable requirements of federal, state, and local
                  laws, and regulations thereunder, including, to the extent
                  applicable, the laws of any jurisdiction in which any
                  Receivable was originated, the Interstate Land Sales Full
                  Disclosure Act, usury laws, the Federal Truth-In-Lending
                  Act, the Equal Credit Opportunity Act, the Fair Credit Billing
                  Act, the Fair Credit Reporting Act, the Federal Trade
                  Commission Act, the National Flood



                                       20

<PAGE>   21
                  Insurance Act of 1968, the Flood Disaster Protection Act of
                  1973, Federal Reserve Board Regulations B and Z, state
                  adaptations of the National Consumer Act and of the Uniform
                  Consumer Credit Code, and Chapters 116, 119, ll9A, 278, 278A
                  and 278B of the Nevada Revised Statutes.

                  (vi) Binding Obligation. Each Receivable shall constitute the
                  genuine, legal, valid, and binding payment obligation in
                  writing of the Obligor, enforceable by the holder thereof in
                  accordance with its terms subject to applicable bankruptcy,
                  insolvency, reorganization and other laws affecting generally
                  the enforcement of creditors' rights.

                  (vii) Lien on or Interest in Financed Property. At the time of
                  the sale, assignment, and transfer thereof to Purchaser under
                  this Agreement, (a) each Receivable constituting a Deed of
                  Trust Agreement shall be secured by a validly perfected first
                  priority lien on the beneficial interest of Obligor in the
                  Financed Property in favor of Seller, (b) each Receivable
                  constituting a note shall be secured by a validly filed first
                  priority mortgage lien on the interest of Obligor in the
                  Financed Property in favor of Seller or secured by a validly
                  filed deed of trust granted by Obligor on the Financed
                  Property providing Seller with a validly filed first priority
                  lien on the beneficial interest of Obligor in the Financed
                  Property, (c) each Receivable constituting a Right To Use
                  Agreement shall provide Seller or its assignee with a right to
                  terminate the interest of Obligor in the Financed Property
                  upon default by Obligor in the performance of the terms of
                  such Receivable, and (d) each Receivable constituting an
                  Agreement for Deed shall have created a valid, subsisting,
                  perfected and enforceable right in favor of Seller to obtain
                  fee simple title to the related Financed Property after
                  default by and reasonable notice to the Obligor thereunder,
                  and all necessary and appropriate action with respect to such
                  Receivables shall have been taken to perfect such right in the
                  related Financed Property in favor of Seller as vendor.

                  (viii) Receivables in Force. No Receivable shall have been
                  satisfied, subordinated, or rescinded, nor shall any Financed
                  Property have been released from the Lien granted by the
                  related deed of trust, mortgage or the vendor's interest under
                  the related Agreement for Deed, in whole or in part.

                  (ix)  No Defenses.  No facts shall exist which would
                  give rise to any consumer complaint, right of



                                       21

<PAGE>   22
                  rescission, set off, claim, counterclaim, or defense, credit
                  allowance, payment compromise or extension of payment
                  obligation nor shall the same have been asserted or
                  threatened, with respect to any Receivable.

                  (x) No Liens. No Liens or claims shall exist, including Liens
                  for work, labor, or materials relating to any Financed
                  Property, that shall be Liens prior to, or equal or coordinate
                  with, the Lien granted by the Receivable, except for Liens for
                  Taxes not due and payable and Liens disclosed in the title
                  policies issued pursuant to Section 2.O2(c)(v).

                  (xi) Insurance. Adequate physical damage insurance covering
                  the Financed Property subject to any Timeshare Receivable is
                  in force on the Cutoff Date.

                  (xii) Good Title. It is the intention of Seller and Purchaser
                  that the transfer and assignment herein contemplated, taken as
                  a whole, constitute a sale of the Receivables from Seller to
                  Purchaser and effect a valid sale, transfer and assignment of
                  the Receivables by Seller enforceable against creditors of and
                  purchasers from Seller, and that the beneficial interest in
                  and title to the Receivables, not be part of Seller's estate
                  in the event of the filing of a bankruptcy, insolvency,
                  receivership or other petition by or against Seller under any
                  bankruptcy, insolvency, receivership or other similar law. At
                  the time of the transfer and assignment herein contemplated,
                  Seller has good and marketable title to each Receivable free
                  and clear of all Liens except for Liens for Taxes not yet due
                  and payable and, immediately upon the transfer thereof,
                  Purchaser shall have good and marketable title to each
                  Receivable, free and clear of all Liens and rights of others,
                  except for Liens for Taxes not yet due and payable; and the
                  sale, transfer and assignment shall have been perfected under
                  the UCC and applicable real property law on the applicable
                  Cutoff Date (except for filing and recording of UCC financing
                  statements and real estate assignments which may be made
                  subsequent to the Cutoff Date). Notwithstanding the foregoing,
                  in the event that the transfer and assignment herein
                  contemplated is not construed as a sale, Seller hereby grants,
                  assigns and transfers to Purchaser a first-priority security
                  interest in and to the property conveyed to Purchaser pursuant
                  to Section 2.01 to secure the repayment of the purchase price
                  paid by Purchaser pursuant to Section 2.02(b), amounts to be
                  paid to Purchaser pursuant to Section 5.03 hereof and all
                  other obligations of Seller and the Custodian owing to
                  Purchaser in connection with the transactions



                                       22

<PAGE>   23
                  contemplated by this Agreement. No Receivables shall have been
                  sold, transferred, assigned or pledged by Seller to any Person
                  other than Purchaser, except that certain Receivables may have
                  been previously sold by Seller and certain of the Receivables
                  may have been previously pledged by Seller to Finova Capital
                  Corporation, Greyhound Real Estate Finance company, Bank of
                  America NT & SA, Dorfinco Corporation, NBD Bank, or Heller
                  Financial, Inc. or as specified on Schedule A or Schedule A-1
                  to this Agreement, and Seller has delivered sufficient
                  discharges, termination statements and other documents to
                  Purchaser and taken other action pursuant to Section
                  2.02(c)(v) to effectively terminate and discharge all right,
                  title and interest of such Persons in the Receivables.

                  (xiii) Lawful Assignment. No Receivable shall have been
                  originated in, or shall be subject to the laws of, any
                  jurisdiction under which the sale, transfer, and assignment of
                  such Receivable under this Agreement shall be unlawful, void,
                  or voidable or subject to satisfaction of any unfulfilled
                  condition or requirement, or shall subject Purchaser to any
                  licensing or regulatory requirements.

                  (xiv) All Recordings and Filings Made, Etc. All filings,
                  notices and other action, including assignments of deeds of
                  trust and agreements for deed and UCC filings, necessary in
                  any jurisdiction to sell, transfer and assign the Receivables
                  to Purchaser, and to perfect the sale, transfer and assignment
                  of the Receivables to Purchaser shall have been made,
                  including notice to the Trustee that the Receivables
                  constituting Agreements for Deed have been transferred and
                  assigned to Purchaser.

                  (xv) One Original. There shall be only one executed copy
                  designated as the original of the Right To Use Agreement
                  evidencing those Timeshare Receivables arising out of the
                  White Sands Timeshare Project and only one executed copy
                  designated as the original of the Agreements for Deed
                  evidencing those Timeshare Receivables arising out of the Reno
                  Spa Resort Club, Grand Flamingo Villas and Grand Flamingo
                  Towers Timeshare Projects and, in all other cases, there shall
                  be only one original executed promissory note evidencing the
                  indebtedness under each Receivable constituting a Deed of
                  Trust Agreement.

                  (xvi)  Accuracy of Information.  All information
                  furnished by Seller and the Guarantor to Purchaser is,
                  and all information furnished by Seller and the



                                       23

<PAGE>   24
                  Guarantor to Purchaser will be, true and accurate in all
                  material respects.

                  (xvii) Improvements and Buildings: Etc. Seller has completed
                  all improvements to the Subdivision Project and the Timeshare
                  Project which have been promised or committed in any way to
                  any Obligor or which are otherwise required by law or by an
                  applicable zoning, development, building, use or similar laws,
                  ordinances or codes; and the buildings and improvements which
                  are a part of the Timeshare Project, including all
                  foundations, walls, roof, ceilings, plumbing, heating,
                  ventilation, and air conditioning equipment, are in good
                  order, repair and operating condition, without material
                  structural or mechanical defects, and are in full compliance
                  with all laws, ordinances and codes applicable to their
                  construction and current use and Seller has no knowledge of
                  any hidden structural defects, infestation or damage by
                  termites or other destructive elements; neither the
                  Subdivision Project nor the Timeshare Project is situated,
                  used or operated in violation of any zoning, building, health,
                  environmental, labor or other law, ordinance or code (except
                  as disclosed in writing to Purchaser) and Seller has received
                  no notice of any such violation, and Seller has obtained, or
                  caused to be obtained, all necessary or appropriate licenses,
                  permits and authorizations from any governmental authority as
                  may be required for the use and operation of the Subdivision
                  Project and the Timeshare Project; Seller has furnished to
                  Purchaser a list of all material management, maintenance,
                  service, supply, employment and other contracts in effect with
                  respect to the operation and management of the Timeshare
                  Project, together with true and correct copies thereof,
                  pursuant to Section 2.O2(c)(xi); and all Financed Property has
                  vehicular access from public streets and roads and such access
                  is not limited or restricted and all utilities are available
                  (or, in the case of the Subdivision Project, can be extended)
                  to the Financed Property in capacities sufficient to serve the
                  Financed Property for its intended purposes, provided that
                  certain Financed Property in the Subdivision Project does not
                  have available public water or sanitary sewer which must be
                  provided by private well and septic systems.

                  (xviii)  Tax Assessment,  Etc.  All Taxes assessed
                  against the Financed Property in the Subdivision
                  Project are assessed to and payable by the Obligor
                  under the related Receivable, and Taxes on the
                  Timeshare Project are assessed in gross and are payable
                  by the respective owners associations responsible for



                                       24

<PAGE>   25
                  management of the Timeshare Project and not by the Obligor
                  under the related Receivable except by way of assessments by
                  such associations against the Obligors; and neither Seller nor
                  Purchaser shall have responsibility for the payment of any
                  Taxes assessed against any Financed Property in the
                  Subdivision Project unless Seller or Purchaser acquires record
                  title to such Financed Property; Purchaser shall not have
                  responsibility for the payment of any assessment against any
                  of the Financed Property in the Timeshare Project unless
                  Purchaser acquires record title to such Financed Property or
                  terminates an Agreement for Deed and thereby acquires the sole
                  beneficial interest therein.

                  (xix) No Licenses, Etc. It is not necessary for Purchaser to
                  obtain any license, permit or authorization, or to make any
                  regulatory declaration, registration or filing, pursuant to
                  the law of any State outside Georgia or Massachusetts in
                  connection with the purchase of the Receivables or any of the
                  other transactions contemplated by this Agreement which
                  Purchaser has not obtained or made.

                  (xx) Trust Agreements. The rights of Seller in respect of
                  those Timeshare Receivables constituting Agreements for Deed
                  for Financed Property in (a) Grand Flamingo Towers are
                  governed by that certain Amended, Restated and Consolidated
                  Trust Agreement-Grand Flamingo Towers, dated as of March 19,
                  1990, among the Trustee, Vacation Spa Resort, a Tennessee
                  corporation, whose existence ceased upon merger into Seller on
                  March 11, 1993 and Grand Flamingo Owners Association, and (b)
                  Grand Flamingo Villas are governed by that certain Amended,
                  Restated and Consolidated Trust Agreement-Grand Flamingo
                  Villas, dated as of March 19, 1990, among the Trustee,
                  Vacation Spa Resort, a Tennessee corporation, whose existence
                  ceased upon merger into Seller on March 11, 1993 and Grand
                  Flamingo Villas Owners Association; which agreements are
                  valid, binding, enforceable and subsisting, have not been
                  amended or modified (and will not be amended or modified
                  without the consent of Purchaser), all right, title and
                  interest of Seller in the Financed Property thereunder has
                  been assigned to Purchaser pursuant to Section 2.01 of this
                  Agreement, and all necessary or appropriate action has been
                  taken thereunder as of the Closing Date to perfect the sale,
                  transfer and assignment of those Timeshare Receivables
                  constituting Agreements for Deed to Purchaser and to perfect
                  the rights of Purchaser under such Trust Agreements as against
                  Seller and all third parties (subject to any



                                       25

<PAGE>   26
                  rights of Obligors under Agreements for Deed).

                  (xxi) Subsidiaries. Schedule C hereto correctly sets forth the
                  corporate name, jurisdiction of incorporation and ownership
                  percentage with respect to each Subsidiary of the Seller. Each
                  such Subsidiary is a corporation duly organized, validly
                  existing and in good standing under the laws of its
                  jurisdiction of incorporation and is duly qualified to do
                  business in each additional jurisdiction where the failure to
                  so qualify could have a material adverse effect on the
                  Subsidiary or on the transactions contemplated by this
                  Agreement. Each Subsidiary of the Seller has and will have all
                  requisite corporate power to own its properties and to carry
                  on its business as now being conducted and as proposed to be
                  conducted. All outstanding shares of capital stock of each
                  class of each Subsidiary of the Seller, have been and will be
                  validly issued and are fully paid and non assessable and,
                  except as otherwise indicated in Schedule C hereto or
                  disclosed in writing to the Purchaser from time to time, are
                  and will be owned, beneficially and of record, by the Seller
                  or another Subsidiary of the Seller free and clear of any
                  Liens, charges, encumbrances or rights of others whatsoever.

         SECTION 2.04 Repurchase or Replacement Upon Seller's Breach. Seller or
Purchaser, as the case may be, shall inform the other party promptly, in
writing, upon the discovery of any breach of Seller's representations and
warranties pursuant to Section 2.03. Unless the breach shall have been cured to
the reasonable satisfaction of Purchaser on or before the second Record Date
following such discovery, Seller shall repurchase or replace pursuant to Section
4.02 any Receivable affected by the breach. As consideration for the repurchase
or replacement of a Receivable, Seller shall remit the Repurchase Amount of, or
assign a Replacement Receivable for, such Receivable as of such Record Date, in
the manner specified in Article IV.

          SECTION 2.05 Repurchase or Replacement of Defaulted Receivables.
Seller agrees that it shall repurchase any Receivable sold to Purchaser under
this Agreement which constitutes a Defaulted Receivable as of any Record Date,
unless such Defaulted Receivable is replaced pursuant to Section 4.02. As
consideration for the repurchase of a Receivable, Seller shall remit the
Repurchase Amount of, or assign a Replacement Receivable for, such Receivable as
of such Record Date, in the manner specified in Article IV.



                                       26

<PAGE>   27
         SECTION 2.06 Custody of Receivable Files.

         (a) On or before the Closing Date, Purchaser shall revocably appoint
the Custodian, and the Custodian shall accept such appointment, pursuant to the
Custodial Agreement to act as the agent of Purchaser as custodian of the
following documents or instruments which Seller shall deliver to the Custodian
with respect to each Receivable (collectively, a "Custodian Receivable File"):

                  (i) The original promissory note evidencing the indebtedness
                  under the Receivable, endorsed by Seller in blank, or, in the
                  case of a Timeshare Receivable evidenced by an Agreement for
                  Deed or Right To Use Agreement, by the original agreement
                  evidencing the indebtedness under such Receivable; and

                  (ii) The recorded deed of trust or mortgage creating the Lien
                  on the Financed Property in favor of Seller where the
                  Receivable is not evidenced by an Agreement for Deed or Right
                  to Use Agreement.

         (b) On or before the Closing Date, Seller shall segregate the original
copies of the following documents or instruments which shall be held with
respect to each Receivable for the benefit of the Purchaser (collectively, a
"Servicer Receivable File"):

                  (i) The original application for membership fully executed by
                  the Obligor, if any;

                  (ii) The disclosure statement required by the Federal
                  Truth-in-Lending Act if not included in the purchase agreement
                  referred to in clause (iii);

                  (iii) The original purchase agreement entered into by the
                  Obligor with Seller (other than original Agreements for Deed
                  held by the Custodian pursuant to Section 2.06 (a)(i);

                  (iv) The acknowledgement of receipt by the Obligor of the
                  Federal property report for all Land Receivables; and

                  (v) Any and all other documents that Seller shall keep on
                  file, in accordance with applicable law or its customary
                  procedures, relating to a Receivable, an Obligor or any
                  Financed Property.



                                       27

<PAGE>   28
         SECTION 2.07 Duties of Custodian and Seller as Servicer.

         (a) Safekeeping. Custodian shall hold the Custodian Receivable Files on
behalf of Purchaser pursuant to the Custodial Agreement and Seller shall hold
the Servicer Receivable Files on behalf of Purchaser. Seller shall maintain, or
cause the Custodian to maintain, such accurate and complete accounts, records,
and computer systems pertaining to the Receivables as shall be reasonably
requested by Purchaser or as required under the Custodial Agreement or the
Agency Agreement. Seller shall promptly report to Purchaser any failure on the
Custodian's part to hold the Custodian Receivable Files or to maintain accounts,
records and computer systems as herein provided and promptly take appropriate
action to remedy any such failure.

         (b) Maintenance of and Access to Records. Seller shall make available
to Purchaser or its duly authorized representatives, attorneys, or auditors the
Servicer Receivable Files and Seller shall make available to Purchaser or its
duly authorized representatives, attorneys or auditors, the related accounts,
records and computer systems maintained by Seller at such times as Purchaser
shall reasonably instruct. Seller shall maintain each Servicer Receivable File
at its chief executive office.

         (c) Release of Documents. Upon written request from Purchaser, Seller
shall deliver any document in the Servicer Receivable Files to Purchaser,
Purchaser's agent or Purchaser's designee, as the case may be, at such place or
places as Purchaser may designate, as soon as practicable.

         SECTION 2.08 Effective Period and Termination. The Custodian's
appointment as Custodian shall become effective as of the Closing Date with
respect to purchased Receivables (or the date of receipt with respect to
Replacement Receivables) and shall continue in full force and effect until
terminated pursuant to the Custodial Agreement. If Purchaser shall terminate the
rights and obligations of Seller, as servicer, under Section 7.01, Seller shall
take any and all action requested by Purchaser to effect delivery of the
Servicer Receivable Files to Purchaser or Purchaser's agent at such place or
places as Purchaser may designate.

          SECTION 2.09 Further Assurances. (a) Within thirty days after the
Closing Date, Seller shall have given notice to the applicable Obligors and
shall have taken all other action to require that all payments under the
Receivables are paid directly by the Obligors to the Lockbox (as defined in the
Agency Agreement) maintained by the Custodian for the benefit of Purchaser under
the Agency Agreement.



                                       28

<PAGE>   29
         (b) Seller will from time to time do and perform, and cause to be done
and performed, any and all acts and execute any and all documents (including,
without limitation, the execution, amendment or supplementation of any mortgage,
deed of trust, agreement for deed, assignments, financing statements and
continuation statements relating to the Receivables for filing under applicable
law (including the provisions of the UCC), the execution, amendment or
supplementation of any instrument of transfer, and the making of notations on
the records of Seller of title and delivery of the Receivables to the Custodian
as Purchaser's bailee) as may be requested by Purchaser in order to effect the
purposes of this Agreement and the sale of the Receivables hereunder and to
perfect, preserve and protect the interest of Purchaser in the Receivables
against all Persons whomsoever.

          SECTION 2.10 Power of Attorney. Without limiting the generality of the
sale, transfer and assignment of the Receivables, but in furtherance thereof,
Seller hereby grants Purchaser (and all Persons designated by Purchaser) an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, (a) to notify any or all Obligors that a Receivable has been sold to
Purchaser, (b) to do and perform any and all acts and execute any and all
documents in the name and on behalf of Seller as Purchaser may deem necessary or
appropriate in order to effect the purposes of this Agreement and the sale of
the Receivables hereunder and to perfect, preserve and protect the interest of
Purchaser in the Receivables against all Persons whomsoever, and (c) to endorse
the name of Seller upon any checks, drafts, or similar items which are received
in payment of, or in connection with any Receivable, and to do all things
necessary in order to reduce the same to money. Seller will from time to time
execute and deliver to Purchaser such additional powers of attorney as Purchaser
may request to give effect to the sale, transfer and assignment of the
Receivables and the other provisions of this Agreement.

                                   ARTICLE III

                   Administration and Servicing of Receivables


         SECTION 3.01 Duties of Seller as Servicer. From and after the Closing
Date, the Seller, as servicer shall administer the Receivables with reasonable
care and in compliance with all applicable laws, using that degree of skill and
attention that a prudent servicer would exercise with respect to comparable
receivables that it services for itself and others. Seller's duties as servicer
shall include posting of all payments, responding to inquiries by federal,
state, or local governmental authorities regarding the Receivables,
investigating delinquencies, sending monthly statements to Obligors, responding



                                       29

<PAGE>   30
to inquiries by Obligors with respect to the Receivables, reporting tax
information and complying with all other requirements under applicable law and
its customary practices. Seller, as servicer, shall follow the same standards,
policies, and procedures in performing its duties as servicer as it follows with
respect to comparable receivables that it services for itself and others and as
specifically outlined in the Credit and Collection Policies. Without limiting
the generality of the foregoing Seller, as servicer, shall be authorized and
empowered by Purchaser to execute and deliver, on behalf of Purchaser, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with respect to the
Receivables or the Financed Property upon appropriate payment in full of the
related Receivable and satisfaction of all obligations of the Obligor to
Purchaser thereunder.

         SECTION 3.02 Collection of Receivables Payments. Seller and Purchaser
shall cause the Custodian to be the sole recipient of all payments on the
Receivables pursuant to the terms of the Agency Agreement. The Seller shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and shall
follow such collection procedures as it follows with respect to comparable
receivables that it services for itself and others and as specifically outlined
in the Credit and Collection Policies. Seller may not waive any late payment
charge or any other fee that may be due in the ordinary course of servicing a
Receivable except as expressly provided in the Credit and Collection Policies.
Seller will at no time be more lenient or less careful in its application of
standards, policies and procedures with respect to servicing the Receivables
than it is with respect to comparable receivables that it services for itself
and others and will act in a manner so as to enhance the collectability of the
Receivables. The Seller will not modify or waive any provision of the Credit and
Collection Policies without prior written notice to and the written consent of
Purchaser. In the event that Seller shall receive any such payments, Seller
agrees to deposit daily to the Lockbox Account (as defined in the Agency
Agreement), in the form received and with all necessary endorsements, all
payments by or on behalf of Obligors on the Receivables, as collected during the
Collection Period, and the funds therein shall be held as provided in the Agency
Agreement pending payment to Purchaser as provided therein. Seller shall further
take such actions as may be reasonably requested by Purchaser to assure that any
payments on the Receivables which may be received by third parties shall be
deposited in the Lockbox Account or as otherwise specified by Purchaser. Seller
shall provide prompt notice to Purchaser of any payments on the Receivables
known to Seller which are not paid initially to the Lockbox Account. In
addition, if requested by Purchaser, Seller, as servicer, shall cause notice to
be given promptly to the



                                       30

<PAGE>   31
Obligors of the sale, transfer and assignment of the Receivables to Purchaser in
a manner acceptable to Purchaser. In addition to the notification required
pursuant to Section 2.09(a), Seller shall, upon request of Purchaser, take such
further action as may be necessary after such initial notice to the Obligors to
assure that all payments under the Receivables continue to be paid directly by
the Obligors to the Lockbox (as defined in the Agency Agreement) maintained by
the Custodian for the benefit of Purchaser under the Agency Agreement.

         SECTION 3.03 Realization Upon Receivables. On behalf of Purchaser and
if requested by Purchaser, the Seller, as servicer, shall use its best efforts,
consistent with prudent servicing procedures and as specifically outlined in the
Credit and Collection Policies, to foreclose or otherwise recover and convert
the ownership of the Financed Property securing any Receivable which constitutes
a Defaulted Receivable and which has not been repurchased by Seller. In the
enforcement or collection of the Receivables, as provided above in this Section
3.03, the Seller, as servicer, shall be entitled to sue thereon in its own name
if possible, or if, but only if, Purchaser provides its express prior written
consent, as agent of Purchaser. In no event shall the Seller be entitled to take
any action which would make Purchaser a party to any litigation without
Purchaser's express prior written consent. Purchaser shall have no obligation to
Seller to take any action or commence any proceedings to realize upon any
Receivable or to enforce any of its rights or remedies with respect thereto.

         SECTION 3.04 Operation and Maintenance of Timeshare Project. (a) The
operation and management of the Timeshare Project has been delegated by the
owners associations responsible therefor, as of the date of this Agreement, to
the Seller or in the case of the Brigantine Inn Timeshare Project to Brigantine
Inn Management, Inc. a Subsidiary of Seller, and in the case of the Brigantine
Inn Villas Timeshare Project to Brigantine Preferred Properties, Inc., a
Subsidiary of Seller pursuant to the management agreements referred to in
Section 2.02(c)(xi) hereof. The Seller agrees that neither it nor Brigantine Inn
Management, Inc. nor Brigantine Preferred Properties, Inc. shall resign as
manager of the Timeshare Project or the Brigantine Inn or Brigantine Inn Villas
Timeshare Projects and shall use its best efforts to remain as such manager
until the termination of this Agreement, and shall at all times exercise that
degree of skill and attention that a good manager would exercise with respect to
comparable projects that it manages for itself or others and in a manner that
will cause the image and quality of the Timeshare Project to be maintained at a
level not less than that existing on the date of this Agreement.

         (b)  Without limiting the foregoing, and whether or not the
Seller is acting as manager for the Timeshare Project, if Seller



                                       31

<PAGE>   32
shall determine that an owners association has allowed the liability coverage or
the physical damage insurance covering any Financed Property in the Timeshare
Project to lapse or has not obtained adequate insurance coverage, Seller shall
cause such association to obtain such insurance or shall obtain insurance at its
own expense sufficient to insure Purchaser against liability claims in at least
such amounts as exist on the date of this Agreement and to insure Purchaser's
interest in the Financed Property. Adequate insurance coverage shall mean
casualty and physical damage insurance as described above and extended coverage
in an amount sufficient to permit rebuilding of the Timeshare Project to at
least its condition on the date of this Agreement or, if the Timeshare Project
is not rebuilt, to result in payment to Purchaser as mortgagee of an amount not
less than the Principal Balance, Accrued Interest and other amounts owing on the
Receivables arising out of the Timeshare Project. Seller shall provide Purchaser
with evidence that adequate insurance coverage is in force with standard
mortgagee clauses in favor of Purchaser or naming Purchaser as additional
insured, as appropriate, annually during the term of this Agreement.

         (c) Seller shall cause to be paid when due all Taxes which create or
could give rise to a Lien on the Financed Property in the Timeshare Project that
is prior to, or equal or coordinate with, the Lien granted by the related
Receivable. Seller's present policy is to purchase lien rights of owners
associations with respect to deficient assessments against interests in the
Timeshare Project or to loan or advance funds to the respective owners
association if required in order to maintain adequate funding for the operation
and maintenance of the Timeshare Project, and Seller agrees that during the term
of this Agreement to continue to purchase such rights or to make such loans or
advances in an amount sufficient to permit such associations to operate and
maintain the Timeshare Project as contemplated in this Section and to pay all
applicable Taxes. Seller, for itself and all of its affiliates, agrees that all
lien rights acquired as a result of any such purchase or loan or advance are
expressly subordinate and subject to the lien and security interest of Purchaser
in the related Financed Property. It is expressly acknowledged and agreed that
the proceeds of any single interest insurance or similar insurance or indemnity
with respect to any of the Receivables, if any, are conveyed to Purchaser
pursuant to Section 2.01 and Seller shall take or cause to be taken all action
necessary to preserve rights thereunder. If Seller determines that liability
insurance or physical damage insurance has lapsed with respect to any Financed
Property in the Timeshare Project or that the coverage is not adequate, Seller
will notify Purchaser of such determination. Seller shall cause any physical
damage insurance maintained on the Financed Property in the Timeshare Project
and other insurance maintained with respect to any Receivable to provide that
the loss payable thereunder shall be payable to Purchaser as its interest may
appear and that



                                       32

<PAGE>   33
Purchaser is named as additional insured with respect to liability insurance.

         (d) Seller for itself and all Subsidiaries managing a Timeshare Project
covenants and agrees that Seller will and will cause all Subsidiaries to use its
and their best efforts to remain in management of each project comprising the
Timeshare Project and further covenants and agrees that neither it nor any
Subsidiary shall voluntarily resign from its position as manager for each resort
comprising the Timeshare Project where it is so acting on the Closing Date. If
Seller or any of its Subsidiaries resigns from the management of a resort
comprising a Timeshare Project without the consent of Purchaser, Purchaser may,
at its discretion and option, deem all Receivables from the resort from which
Seller or its Subsidiary has resigned as Defaulted Receivables as of the next
Record Date.

         SECTION 3.05 Maintenance of Liens in Financed Property. Seller shall
take such steps as are necessary to maintain perfection of the lien created by
each Receivable in the respective Financed Property. Purchaser hereby
authorizes, and the Seller hereby agrees, to take such steps as are necessary to
preserve and protect such lien on behalf of Purchaser.

         SECTION 3.06 Covenants of Seller as Servicer. Seller, as servicer,
hereby makes the following covenants on which Purchaser will rely in purchasing
the Receivables:

          (a) Security Interest to Remain in Force. The Financed Property
securing each Receivable shall not be released from the lien granted by the
Receivable in whole or in part, except as contemplated in Section 3.01 and
except that Seller, as servicer, may permit the release of the Financed Property
securing any Receivable as part of a transaction where the related Obligor is
entering into an upgrading or downgrading contract for the purchase of other
property owned by Seller provided that (i) the Receivable to which such Financed
Property relates shall be repurchased or replaced pursuant to Section 4.02 by
Seller as a Defaulted Receivable on the Report Date next following the month in
which such transaction is consummated and (ii) no Event of Transfer, or event or
condition which would notice or lapse of time, or both, could become such an
Event of Transfer shall have occurred and be existing on the date such
transaction is made.

          (b) No Impairment. The Seller, as servicer, shall observe and perform,
or cause to be observed or performed, all contractual undertakings and legal
obligations to the Obligor under each Receivable, and shall not permit any
subordination or rescission of any Receivable or other impairment of the rights
of Purchaser in the Receivables in any other way, and shall take all action
necessary to secure all available rights of recourse, if any, with respect to
the Receivables against other third parties;



                                       33

<PAGE>   34
         (c) Amendments. The Seller, as servicer, shall not increase the number
of payments under a Receivable, nor increase the Amount Financed under a
Receivable, nor agree to any decrease in the Amount Financed or reduction in the
amount of any payments under a Receivable, nor grant or permit, except as
permitted pursuant to Section 3.06(a), any modification or adjustment with
respect to any Receivable; and

         (d) Performance. The Seller, as servicer, shall observe and perform all
of its obligations and duties as servicer under this Agreement in conformity
with applicable law and the terms and conditions of this Agreement.

         SECTION 3.07 Replacement Upon Breach. Seller and Purchaser, as the case
may be, shall inform the other party promptly, in writing, upon the discovery of
any breach by the Seller, as servicer, of its obligations under Section 3.06.
Unless the breach shall have been cured to the reasonable satisfaction of
Purchaser by the second Record Date following such discovery, Seller shall
replace pursuant to Section 4.02, any Receivable affected by such breach, as of
such Record Date, without recourse to or warranty by Purchaser.

         SECTION 3.08 Servicing Expenses. The Seller shall be liable for all
expenses incurred by it in connection with its activities hereunder, including
taxes imposed, expenses incurred in connection with distributions and reports to
Purchaser and expenses incurred for the account of the Obligor in connection
with realizing upon Receivables as provided under Section 3.03. Seller shall pay
all fees and charges of the Custodian in connection with the Custodial Agreement
and the Agency Agreement and of the Trustee under the Trust Agreements. Seller,
as servicer, shall not be entitled to receive any compensation for its services
hereunder or otherwise retain any receipts or payments (from whatever source) on
the Receivables.

         SECTION 3.09 Seller Certificate. On or before the Distribution Date in
each calendar month, Seller, as servicer, shall deliver to Purchaser a
certificate in form acceptable to Purchaser, certified as true and correct by
the President or any Vice President of the Seller containing information with
respect to the last Collection Period and all information necessary to make the
distributions under Article IV. Seller, as servicer, also shall specify in such
certificate (a) those Receivables which constitute Defaulted Receivables as of
the Record Date for such Collection Period and with each such certificate
delivered, those Receivables in respect of which the Seller, as servicer, has
knowledge that the Obligors have failed to pay applicable assessments or Taxes
when due; it being understood that the Seller shall not be required to undertake
title searches in this respect and (b) those Receivables which are to be
purchased or replaced by Seller as of the Record Date, pursuant to Section



                                       34

<PAGE>   35
2.04, 2.O5 and 3.07. Upon request by Purchaser, Seller shall promptly provide to
Purchaser such further information pertinent to the Receivables or this
Agreement as Purchaser may reasonably request.

         SECTION 3.10 Monthly Statement as to Compliance. The Seller shall
deliver to Purchaser, on or before the Report Date a certificate signed by the
President or any Vice President of Seller stating that (a) a review of the
activities of the Seller, as servicer, during the preceding calendar month and
of its performance under this Agreement has been made under such officer's
supervision and (b) to the best of such officer's knowledge, based on such
review, the Seller has fulfilled all its obligations under this Agreement
throughout such month, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.

                                   ARTICLE IV

                  Distributions, Replacements and Reassignments


         Section 4.01 Distributions. On the Distribution Date (or in the case of
Section 4.01(e) not later than the Report Date) with respect to each Record
Date, the following distributions shall be made:

         (a) By Agent to Purchaser pursuant to the Agency Agreement and to the
extent not previously paid thereunder (or by such Person that may then be
receiving such amounts if the Agency Agreement shall be terminated), an amount
equal to all Collected Interest together with all Collected Principal received
by Agent during the preceding Collection Period.

         (b) By the Seller to Purchaser, an amount equal to the Repurchase
Amount of all Receivables to be repurchased as of such Record Date by the Seller
pursuant to Section 3.07, which are not replaced pursuant to Section 4.02.

         (c) By Seller to Purchaser, an amount equal to the Repurchase Amount of
all Receivables to be repurchased as of such Record Date by such Seller pursuant
to Section 2.04, which are not replaced pursuant to Section 4.02.

         (d) By Seller to Purchaser, an amount equal to the Repurchase Amount of
all Defaulted Receivables to be repurchased as of such Record Date by such
Seller pursuant to Section 2.05, which are not replaced pursuant to Section
4.02.

         (e) By Purchaser to Seller, on or before each Report Date the
Receivables or amount in cash thereof which shall be



                                       35

<PAGE>   36
withdrawn from the Reserve Account, equal to the amount, if any, by which the
Reserve Account Balance, as of such Record Date and after giving effect to
deposits and charges thereto pursuant to Article V, exceeds the Minimum Reserve
Account Amount as of such Record Date, but only if no Event of Transfer and no
event or condition which with notice or lapse of time, or both, could become an
Event of Transfer has occurred and is then continuing.

         (f) By Seller to Purchaser, an amount with respect to such Record Date
equal to the amount, if any, by which the Minimum Reserve Account Amount as of
such Record Date exceeds the Reserve Account Balance as of such Record Date,
which shall be deposited in the Reserve Account pursuant to Section 5.04.

         (g) By Seller to Purchaser, an amount equal to the amount payable to
Purchaser pursuant to Section 5.03, if applicable.

         SECTION 4.02 Replacement of Receivables. (a) In lieu of repurchasing
Receivables pursuant to Section 3.06(a), 3.07, 2.04 and 2.05, and payment of the
related Repurchase Amount pursuant to Section 3.06 (a), 4.01(b), (c) and (d),
Seller may propose to transfer, assign and otherwise convey Replacement
Receivables to Purchaser as of the respective Record Date, in replacement for
Receivables otherwise required to be so repurchased. Purchaser shall not be
obligated to accept such proposal and may accept some or all of the proposed
Replacement Receivables. If Purchaser does not accept such proposal, or accepts
such proposal in part, Seller shall propose to transfer, assign and otherwise
convey additional Replacement Receivables to Purchaser as of the respective
Record Date, in replacement for Receivables otherwise required to be so
repurchased. Purchaser shall not be obligated to accept such additional proposal
and may accept some or all of the proposed Replacement Receivables.

If Purchaser does not accept after the additional offer of Replacement
Receivables, or accepts such proposal in part, the Seller shall repurchase for
cash all such Receivables not so replaced pursuant to Section 3.06(a) 3.07, 2.04
or 2.05, as the case may be. For purposes of determining the amount of the
payment, if any, to be made in respect of the repurchase of Receivables, Seller
shall receive a credit against the Repurchase Amount for Replacement Receivables
so assigned in an amount equal to the Principal Balance of the Replacement
Receivable as of such Record Date.

           (b) Each request for replacement of Receivables pursuant to this
Section 4.O2 shall be made by Seller no later than the applicable Report Date
and shall be effected by a Replacement Request. If the Purchaser fails to notify
Seller of its acceptance, in whole or in part, of such offer to replace
Receivables prior to such Distribution Date, the Seller shall repurchase all
such receivables to be repurchased on such Distribution Date pursuant to Section
3.06 (a), 3.07, 2.04 or



                                       36

<PAGE>   37
2.05, as the case may be. Such replacement shall be consummated by the execution
and delivery of the documentation described in Section 2.02(c)(iv) and (v), and
such other documents and completion of such other matters as the Purchaser may
reasonably request. To the extent that the Principal Balance as of such Record
Date of the Replacement Receivables to be assigned on any Distribution Date
exceeds the Principal Balance of the Receivables so replaced, as of such Record
Date, such excess shall be applied, upon request of the Seller, in replacement,
in whole or in part, for other Receivables pursuant to this Section 4.02 on
succeeding Distribution Dates.

         SECTION 4.03 Manner of Payment: Net Distributions. All distributions to
be made to the Purchaser pursuant to Section 4.01 shall be made by wire transfer
of immediately available funds to BankBoston, N.A., 100 Federal Street, Boston,
Massachusetts 02110, ABA # 011000390, Account Name: BankBoston, N.A. PEC
Portfolio Collection Account #4, Account Number 606- 48765. As provided in
Section 3.09, Seller, as servicer, shall make a computation of the remittances
to be made pursuant to Section 4.01 above, and the remittances shall be made, on
a net basis, provided, however, that the Purchaser shall not be obligated to
make any distribution to the Seller if any Event of Transfer, or any event or
condition which with notice or lapse of time, or both, could become an Event of
Transfer shall have occurred and is continuing. Nonetheless, Seller, as
servicer, shall account for all of the above described amounts as if such
amounts were deposited and distributed separately. In addition to the deposits
and distributions to be made pursuant to Section 4.01, the Purchaser shall make
those deposits to and charges against the Reserve Account provided for in
Article V.

         SECTION 4.04 Reassignments. Upon repurchase or replacement of a
Receivable, the Purchaser shall execute and deliver, without recourse or
warranty (except that its signatures are genuine or authorized and against its
actions that impair its good title to the instruments), any documents reasonably
requested by the Seller from time to time evidencing or confirming the
reassignment of the repurchased or replaced Receivable and the related Financed
Property and the release of such repurchased or replaced Receivable from any
UCC-1 financing statement filed in connection with the assignment of such
Receivable to Purchaser so long as (i) the form of the proposed document is
prepared at the expense of Seller and furnished to Purchaser, (ii) the form and
substance of the proposed document are satisfactory to Purchaser and its
counsel, and (iii) Purchaser and its counsel are afforded a reasonable time to
review and process the proposed document, which amount of time shall not in any
event be less than ten days.

                                    ARTICLE V

                                 Reserve Account



                                       37

<PAGE>   38
         SECTION 5.01 Establishment of Reserve Account. On or prior to the
Closing Date, Seller will establish by pledge and delivery to Custodian, cash
and/or Receivables acceptable to Purchaser in its sole discretion, in an amount
sufficient to equal the Minimum Reserve Account Amount. Such cash and/or
Receivables shall be placed in a custodial reserve account (referred to as the
"Reserve Account") for the benefit of Purchaser who shall have a security
interest in such Reserve Account. Such Reserve Account shall be established for
the benefit of Purchaser and shall be for the sole use of Purchaser until such
time as Purchaser shall have recovered and been repaid the purchase price, its
yield of 9.00% on the unreimbursed portion of the purchase price outstanding
from time to time from the Pool at the Initial Closing Date, such yield on the
unreimbursed portion of the purchase price outstanding from time to time from
the Pool at the Subsequent Closing Date as is agreed to between Purchaser and
Seller after Purchaser has had an opportunity to conduct due diligence on the
Pool offered and after Purchaser has obtained the necessary approvals for such
purchase, all reasonable costs and expenses incurred in connection with this
transaction and all sums due from Seller to Purchaser pursuant to a Purchase
Agreement of December 31, 1992 between The Oxford Finance Companies, Inc. and
Purchaser, a Purchase and Servicing Agreement of July 6, 1994 between Purchaser
and Seller or a Purchase and Servicing Agreement of August 31, 1995 between
Purchaser and Seller. Seller hereby grants to Purchaser a first priority lien on
and security interest in, as collateral security for the payment and performance
of the obligations of the Seller and the Custodian under the terms of this
Agreement, the Custodial Agreement and the Agency Agreement, the Reserve
Account, the cash and/or Receivables placed therein from time to time and any
investments thereof and proceeds of such investments. Purchaser may at any time
and from time to time, without notice to Seller (any requirement for such notice
being expressly waived by Seller) set off and apply against any and all of the
obligations of Seller hereafter existing under this Agreement, the Custodial
Agreement or the Agency Agreement any and all monies held in the Reserve Account
and all investments thereof and proceeds of such investments and any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by Purchaser to or for the credit
or the account of Seller and any property of Seller from time to time in
possession of Purchaser, irrespective of whether or not Purchaser shall have
made any demand hereunder and although such obligations may be contingent and
matured. The rights of Purchaser under this Section 5.01 are in addition to
other rights and remedies (including other rights of set off) which Purchaser
may have.



                                       38

<PAGE>   39
         In order to deposit Receivables into the Reserve Account, Seller shall
execute a collateral assignment to Purchaser of such Receivables, together with
any necessary appropriately recorded collateral assignment of deeds of trust or
mortgages, and together with an appropriate UCC-1 filing, so as to perfect
Purchaser's security interest in such Receivables.

         In determining the Reserve Account Balance at any time, Seller shall
receive credit for the aggregate Principal Balance of all Receivables
collaterally assigned to Purchaser which are not Defaulted Receivables at such
time. Provided the Reserve Account Balance is at least equal to the Minimum
Reserve Account Amount, Seller may remove Defaulted Receivables from the Reserve
Account without payment or substitution therefor.

         Seller may at any time remove from the Reserve Account any Receivable
or Receivables which are not Defaulted Receivables and substitute therefor (a)
cash in the amount of the aggregate Principal Balance of such Receivable or
Receivables being removed from the Reserve Account or (b) a Receivable or
Receivables with an aggregate principal balance at least equal to the aggregate
principal balance of the Receivable or Receivables being removed from the
Reserve Account, which substitute Receivable or Receivables shall be acceptable
to Purchaser.

         At such time as the Seller is permitted under this Agreement to remove
any Receivables from the Reserve Account, Purchaser shall promptly reassign such
Receivables to Seller and execute any necessary recordable assignments of deeds
of trust or mortgages and execute any UCC releases as are necessary to transfer
such Receivables back to Seller free and clear of Purchaser's security interest
therein. Seller shall also advise the Custodian and Agent under the Custodial
Agreement and Agency Agreement of such reassignment.

         SECTION 5.02 Charges Against Reserve Account. If, on any Distribution
Date, Seller, Custodian or Agent shall fail to make any distribution, in whole
or in part, required to be made to Purchaser pursuant to Section 4.01(b), (c) or
(d) or Seller shall fail to replace Receivables as provided in Section 4.02, or
the Pool shall fail to equal the unreimbursed purchase price as of the preceding
Record Date, Purchaser shall charge against the Reserve Account as of the
preceding Record Date and withdraw from the Reserve Account any cash and/or
Receivables having a Principal Balance equal to the aggregate unpaid Repurchase
Amount of the affected Receivables for the preceding Collection Period or such
amount of Receivables necessary for Purchaser to have in its constructive
possession and control through Custodian a Pool equalling the unreimbursed
purchase price. Such Receivables withdrawn from the Reserve Account shall become
the property of Purchaser. So long as the Minimum Reserve Account Amount is
maintained by Seller, Seller may request and



                                       39

<PAGE>   40
receive from Purchaser and from the Reserve Account any Defaulted Receivable.

         SECTION 5.03 Other Charges Against the Reserve Account. As of each
Record Date, if an Obligor or an Obligor's representative or successor
successfully shall assert a claim (including the avoidance of a preferential
transfer under bankruptcy law) that results in a liability of Purchaser to such
Obligor, Seller shall, on each Distribution Date, pay to Purchaser an amount
equal to any loss incurred by Purchaser as of the Record Date due to such claim
pursuant to Section 4.01(g). Seller shall pursue reasonable remedies against any
necessary or proper parties, as appropriate, to recover the amount of any loss
to Purchaser caused by such claim. Nothing in this Section 5.03 shall limit or
impair any right of Purchaser to indemnification under this Agreement in
connection with any such loss.

         SECTION 5.04 Other Deposits To and Charges Against Reserve Account. On
each Distribution Date, if payments of Collected Interest made to the Purchaser
for a Collection Period with respect to the Receivables exceed or are less than
an amount equal to the per annum yield specified in Section 5.01 computed, from
time to time, on the Pool as reduced by payments received during such Collection
Period by the Purchaser, then an amount equal to such excess shall be deposited
by Purchaser into, and the amount of any such deficiency shall be paid by Seller
to the Reserve Account, as the case may be. In addition, Seller shall pay the
additional amounts for deposit to the Reserve Account provided for in Section
4.01 (f), if any, and such amounts, together with any amounts paid by Guarantor
pursuant to the Guaranty Agreement shall be deposited by Purchaser into the
Reserve Account.

         SECTION 5.05 Minimum Reserve Account Amount. As of each Record Date,
the Reserve Account Balance shall equal the Minimum Reserve Account Amount.
Seller shall deposit with Purchaser or with Custodian such additional
Receivables, acceptable to Purchaser in its sole discretion, valued at the then
present Principal Balance, as are necessary on or before each Record Date to
insure that at all times Seller shall maintain in the Reserve Account the
Minimum Reserve Account Amount but if any such Receivable is rejected by
Purchaser, Purchaser shall have the right to substitute cash in lieu thereof.
Purchaser shall have the right in its sole and absolute discretion to require
Seller to provide either a different type of replacement (land sale or
timeshare) contract or to make a cash payment or deposit to insure that the
Minimum Reserve Account Amount is in effect on each Record Date.



                                       40

<PAGE>   41
         SECTION 5.06 Termination of Reserve Account. If, after payment in full
of all of the Receivables sold to Purchaser by Seller and after satisfaction of
all obligations of the Seller (whether as Seller or as servicer) hereunder, any
monies or Receivables shall remain in the Reserve Account, Purchaser shall remit
any remaining balance of monies to Seller and assign any remaining Receivables
to Seller.

                                   ARTICLE VI

                               Seller as Servicer


         SECTION 6.01 Representations of Seller and of Seller as Servicer.
Seller for itself and as servicer make the following representations on which
Purchaser shall rely in purchasing the Receivables (or, except as noted in any
Replacement Request in accepting any assignment of Replacement Receivables
pursuant to Section 4.02). The representations shall speak as of the Closing
Date (or the Distribution Date in the case of Replacement Receivables assigned
pursuant to Section 4.02), and shall survive the sale, transfer and assignment
of the Receivables to Purchaser.

         (i) Organization and Good Standing. Seller shall have been duly
organized and shall be validly existing as a corporation in good standing under
the laws of the State of Nevada with the power and authority to own its
respective properties and to conduct its respective business as such properties
shall be currently owned and such business is presently conducted, and Seller
had, at all relevant times, and shall have, all requisite power, authority, and
legal right to acquire and own the Receivables.

         (ii) Due Qualification. Seller shall be duly qualified to do business
as a foreign corporation in good standing (to the extent the failure to so
qualify could have a material adverse effect on it or on the Receivables or the
transactions contemplated hereby) and shall have obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business, including the undertakings under this Agreement,
shall require such qualifications, licenses or approvals.



                                       41

<PAGE>   42
         (iii) Power and Authority. Seller shall have the power and authority to
execute and deliver this Agreement and to carry out its terms and Seller shall
have full power and authority to sell, transfer, assign and service the
Receivables and shall have duly authorized such sale, transfer, assignment,
servicing and deposit to and with Purchaser by all necessary corporate action;
and the execution, delivery, and performance of this Agreement shall have been
duly authorized by Seller by all necessary corporate action.

         (iv) Valid Sale: Binding Obligations. This Agreement shall effect a
valid sale, transfer, and assignment of the Receivables and create in Purchaser
a valid and perfected first-priority lien on and security interest in the
Reserve Account and all monies therein, and investments and proceeds thereof, by
Seller, enforceable against creditors of and purchasers from Seller; and this
Agreement shall constitute a legal, valid, and binding obligation of Seller
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.

         (v) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof shall not conflict with,
or result in any breach of, any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles or
certificate of incorporation, charter, or bylaws of Seller, or conflict with or
breach any of the material terms or provisions of, or constitute (with or
without notice or lapse of time) a default under, any indenture, agreement, or
other instrument to which Seller is a party or by which it or its property shall
be bound; nor result in the creation or imposition of any Lien upon any of their
respective properties pursuant to the terms of any such indenture, agreement, or
other instrument (other than this Agreement); nor violate any law or any order,
rule or regulation applicable to Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over Seller or their respective properties; and no
governmental and nongovernmental consents, approvals, authorizations,
declarations, registrations or filings are or will be required on the part of
Seller in connection with the execution, delivery and performance of this
Agreement or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of this Agreement, except for filings
contemplated by Section 2.02 and routine filings required to maintain corporate
standing and currently effective governmental registrations, licenses and
permits.



                                       42

<PAGE>   43
         (vi) No Proceedings. There are no proceedings or investigations
pending, or threatened, before any court, regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over the
Seller or its properties: (a) asserting the invalidity of this Agreement or the
Receivables, (b) seeking to prevent the sale of the Receivables or the
consummation of any of the transactions contemplated by this Agreement, or (c)
seeking any determination or ruling that are expected to materially and
adversely affect the performance by Seller of its obligations under, or the
validity or enforceability of, this Agreement or the Receivables.

         (vii) Location of Chief Executive Office. The chief executive office of
Seller is located at The PEC Building, 4310 Paradise Road, Las Vegas, Nevada
89109-6572.

         (viii) Accuracy of Information. All factual information furnished by
Seller to Purchaser is, and all such factual information hereafter furnished by
Seller to Purchaser will be, true and accurate in all material respects.

         (ix) No Finders or Brokers. Seller has not engaged any finder or broker
in connection with the transactions contemplated by this Agreement and no fees
or commissions are payable by Seller in connection herewith.

         SECTION 6.02 Indemnities of Seller.

          Seller shall indemnify, defend and hold harmless Purchaser from and
against any taxes that may at any time be asserted against Purchaser with
respect to the sale of the Receivables to Purchaser, including any Taxes
relating to any Financed Property, and any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes and including any such taxes imposed by the State of Nevada, or any
political subdivision or taxing authority thereof, on the Receivables or any
income therefrom, or on the Financed Property or on Purchaser as a result of the
purchase of the Receivables hereunder (but not including any taxes imposed on
the overall net income of Purchaser by the jurisdictions, or any political
subdivision or taxing authority of any such jurisdictions, in which Purchaser
has its principal office).

         Seller shall defend, indemnify, and hold harmless Purchaser from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from the management, use, ownership, or operation of
any Financed Property by Seller or any Affiliate or other Person acting on its
behalf.



                                       43

<PAGE>   44
         Seller shall indemnify Purchaser for any and all costs, expenses,
losses, damages, claims, and liabilities of any kind whatsoever that may be
imposed on, incurred, or asserted against Purchaser as the result of any act or
omission attributable to the original Custodian or any successor Custodian
approved in writing by Seller (which approval shall not be unreasonably
withheld), in any way relating to the maintenance and custody by the Custodian
of the Custodian Receivable Files or arising from the transaction contemplated
by the Custodial Agreement or the Agency Agreement.

         Seller shall indemnify, defend, and hold harmless Purchaser from and
against any and all other costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon Purchaser through, the purchase of
the Receivables or its participation in any of the transactions contemplated by
this Agreement, whether attributable to Seller, any Obligor or any other Person
(other than a successor Custodian or servicer which has not been approved in
writing by Seller, which approval shall not be unreasonably withheld) including
failure of Seller as servicer to provide notice of sale of any Financed Property
to the related Obligor and failure to comply with applicable laws in collecting
the Receivables or to acts or omissions of any successor Custodian which has
been approved in writing by the Seller as servicer (which approval shall not be
unreasonably withheld).

         Indemnification under this Section shall include reasonable fees and
expenses of counsel and expenses of investigation and litigation, including fees
and expenses of counsel and other expenses incurred in investigating, or
preparing a defense of, any threatened litigation or claim asserted but shall
not include any cost, expense, loss, claim, damage or liability to the extent
attributable to the willful misconduct or gross negligence of Purchaser or to
acts or omissions of any successor Custodian or servicer which has not been
approved in writing by Seller (which approval shall not be unreasonably
withheld). If Seller shall have made any indemnity payments pursuant to this
Section 6.02 and Purchaser thereafter collects any of such amounts from others,
Purchaser shall promptly repay such amounts to the Seller without interest.
Without affecting the survival of any other provision of this Agreement, the
indemnities contained in this Section 6.02 shall survive any payment of the
amounts owing under, or any repurchase or replacement by Seller of any
Receivable and shall survive the termination of this Agreement under Article
VIII.



                                       44

<PAGE>   45
         SECTION 6.03 Protection of Title to the Receivables. Etc. (a) Seller
shall execute and file such assignments of agreements for deed and deeds of
trust, mortgages, financing statements and other documents and cause to be
executed, recorded and filed such continuation statements and shall take or
cause to be taken such other actions, all in such manner and in such places as
may be required by law and as otherwise requested by Purchaser to preserve,
maintain, and protect the interest of Purchaser under this Agreement in the
Receivables and in the proceeds thereof. Seller shall deliver (or cause to be
delivered) to Purchaser file-stamped copies of, or filing receipts for, any
document recorded or filed as provided above, as soon as available following
such filing.

         (b) Seller shall not change its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed pursuant to this Agreement seriously misleading
within the meaning of Section 9-402(7) of the UCC, unless it shall have given
Purchaser at least 60 days prior written notice thereof and shall have taken
such action as Purchaser may request under Section 6.03(a) in connection
therewith.

         (c) Seller shall give Purchaser at least 60 days' prior written notice
of any relocation of their chief executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall have taken such action as Purchaser may
request under Section 6.03(a) in connection therewith. Seller shall at all times
maintain its chief executive office, and the servicer shall at all times
maintain each office from which it shall service Receivables, within the United
States of America.

         (d) Seller shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time distributed in respect of such Receivable.

         (e) Seller shall if requested by Purchaser, place or cause the
Custodian to place, on such documents in any Custodian Receivable File or any
Servicer Receivable File or any folder or file cabinet containing such documents
or folders a notation that the related Receivable has been sold, transferred and
assigned to Purchaser pursuant to this Agreement and shall further obliterate
any such notations indicating any transfer, assignment, pledge or interest of
any other Person therein.



                                       45

<PAGE>   46
Seller shall maintain its computer systems so that, from and after the time of
sale under this Agreement of the Receivables to Purchaser, Seller's and the
master computer records (including archives) of Seller and Seller as servicer
that shall refer to a Receivable indicate clearly that such Receivable is owned
by Purchaser. Indication of Purchaser's ownership of a Receivable shall be
deleted from or modified on the master computer system of Seller and Seller as
servicer when, and only when, the Receivable shall have been paid in full or
repurchased from Purchaser.

         (f) If at any time Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in any Receivables to any
prospective purchaser, lender, or other transferee, Seller shall give to such
prospective purchaser, lender, or other transferee computer tapes, records, or
print-outs (including any restored from archives) that, if they shall refer in
any manner whatsoever to any Receivable, shall indicate clearly that such
Receivable has been sold and is owned by Purchaser.

         (g) Upon request, servicer shall furnish to Purchaser, promptly after
request, such further information pertinent to the Receivables or this Agreement
as Purchaser may request.

         SECTION 6.04 Additional Covenants of Seller. (a) Seller shall not
create, incur or suffer to exist, or purport to create, incur or suffer to
exist, any Lien on the Receivables or the Reserve Account, except in favor of
Purchaser; (b) Seller shall take all actions necessary to assure that all owners
of any Financed Property in the Timeshare Project shall have the right to apply
for (subject to payment of applicable membership charges) exchange privileges
through Resort Condominiums International or another international exchange
organization acceptable to Purchaser, and Seller shall not cause or permit
(where it has a right to consent or object thereto) any change of the Trustee
under the Trust Agreements without the prior written consent of Purchaser, which
consent will not be unreasonably withheld; (c) Seller shall maintain all
licenses and permits and other authority required in connection with the
management of the Timeshare Project and the performance of their respective
obligations under this Agreement; (d) Seller as soon as available and in any
event within 60 days after the end of each fiscal quarter of Seller shall
furnish the consolidated balance sheet of the Seller and its respective
Subsidiaries as of the end of such quarter, and the related consolidated
statements of income and cash flows for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to the year-end audit adjustments) by the chief financial
officer of the



                                       46

<PAGE>   47
Seller as having been prepared in accordance with generally accepted accounting
principles (except those relating to inclusion of footnotes), together with a
certificate of the chief financial officer of the Seller and the Guarantor,
respectively, stating (i) that no event or condition which, with notice or lapse
of time, or both, would constitute an Event of Transfer has occurred and is
continuing or, if an Event of Transfer has occurred and is continuing, a
statement setting forth the details thereof and the action which the Seller has
taken and proposes to take with respect thereto, and (ii) a computation (which
computation shall accompany such certificate and shall be in reasonable detail)
which shows compliance with subparagraphs (f) through (h) hereof; (e) Seller as
soon as available and in any event within 120 days after the end of each fiscal
year of the Seller shall furnish a copy of the consolidated balance sheet of the
Seller and its respective Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, shareholders' equity and cash flows
of the Seller and its respective Subsidiaries for such fiscal year, certified
without qualifications unacceptable to the Purchaser by Deloitte & Touche, or
other independent certified public accountants selected by the Seller and
acceptable to the Purchaser, together with a certificate of such accountants
stating (i) that they have reviewed this Agreement and stating further whether,
in the course of their review of such financial statements, they have become
aware of any event or condition which, with notice or lapse of time, or both,
would constitute an Event of Transfer hereunder, and if such an event or
condition then exists and is continuing, a statement setting forth the nature
and status thereof, and (ii) a computation (which computation shall accompany
such certificate and shall be in reasonable detail) which shows compliance with
subparagraphs (f) through (h) hereof; (f) Seller shall not permit or suffer
Consolidated Tangible Net Worth of the Seller and its Subsidiaries to be less
than $25,000,000 at any time; (g) Seller shall not permit or suffer to be less
than $5,000,000 at any time the aggregate of (i) cash and (ii) the outstanding
principal balance of receivables of the type comprising Receivables under the
Purchase Agreement, for which no payment of principal or interest is more than
sixty days past due in accordance with the Credit and Collection Policies and
which are not subject to any Lien, except Liens for Taxes not yet due and
payable in the case of Timeshare Receivables and Liens for Taxes that have not
been enforced by the applicable taxing authority in the case of Land
Receivables; (h) Seller shall not make any loan or permit the advance of any
funds or property or any other extension of credit to any Guarantor or any
entity substantially controlled by the shareholders of Guarantor if the
aggregate outstanding principal amount thereof would exceed $2,000,000 (the
limitation contained in this sub-section shall be interpreted consistently with
a similar covenant in the Purchase and Servicing Agreements between Purchaser
and Seller of July 6, 1994 and August 31, 1995), or make or extend any guaranty
or



                                       47

<PAGE>   48
similar commitment on behalf of any Affiliate or subsidiary of Guarantor;
provided, however, that the foregoing shall not be deemed to impose any
limitation on (i) the payment of dividends or (ii) the making of any loan,
advance or extension of credit to any wholly-owned Subsidiary of the Seller;
provided, however, that notwithstanding the foregoing, neither the Seller nor
any of its Subsidiaries shall make any such loan, advance or extension of
credit, guaranty or similar commitment to Guarantor for the purpose, directly or
indirectly, of providing financing for any other Subsidiary or Affiliate of
Guarantor; and (i) Seller shall take such steps as are necessary to insure that
no material change in the management of Seller or Guarantor shall occur such
that at least three (3) of the following individuals shall at all times remain
member of the senior management group of Seller- Robert Nederlander, Jerome
Cohen, Don Mayerson and/or Herbert Hirsch.

         SECTION 6.05 Reliance by Seller as Servicer. Seller as servicer and any
director or officer or employee or agent of Seller may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly executed
and submitted by any Person respecting any matter arising under the Agreement.
Except as provided in this Agreement, Seller shall not be under any obligation
to appear in, prosecute, or defend any legal action that shall be unrelated to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability, provided, however, that Seller may, with the express
prior written consent of Purchaser and at Seller's expense unless otherwise
agreed, undertake any reasonable action that it may deem necessary or desirable
in respect of this Agreement and the rights and duties of the parties to this
Agreement.

         SECTION 6.06 Seller as Servicer Not To Resign: New Servicer. Seller as
servicer shall not resign from its obligations and duties under this Agreement
except upon determination that the performance of its duties shall no longer be
permissible under applicable law. Any such determination permitting the
resignation of the servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to Purchaser. No such resignation shall become effective until
Purchaser or a successor servicer shall have assumed the responsibilities and
obligations of the servicer in accordance with Section 7.02, unless otherwise
required by a binding order of any court, or governmental or administrative
entity.

                                   ARTICLE VII

                              Transfer of Servicing




                                       48

<PAGE>   49
         SECTION 7.01 Events of Transfer. If any one of the following events or
conditions shall occur and be continuing:

         (a) Any failure by Seller to deliver or pay when due to Purchaser any
proceeds or payment required to be so delivered or paid under the terms of this
Agreement or to deliver any certificate required to be delivered pursuant to
Section 3.09, if such failure shall continue unremedied for a period of three
Business Days after written notice of such failure is given to Seller by
Purchaser; or

         (b) Failure on the part of the Seller to duly observe or to perform in
any material respect any other covenants or agreements set forth in this
Agreement or in the Custodial Agreement or Agency Agreement, which failure shall
continue unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to Seller by Purchaser; or

         (c) Any material representation made by Seller in Section 6.01 shall
prove to have been incorrect in any material respect when made or deemed made;

then, and in each and every case, Purchaser, by notice in writing to Seller may
(i) terminate all of the rights and obligations of Seller as servicer under this
Agreement or (ii) defer the rights of Seller to receive any distribution
pursuant to Section 4.01(e) until termination of this Agreement pursuant to
Section 8.01, or (iii) any one or more of the foregoing. On or after the receipt
by the Seller as servicer of such written notice of termination, all authority
and power of the Seller as servicer under this Agreement, whether with respect
to the Receivables or otherwise, shall pass to and be vested in Purchaser
pursuant to this Section 7.01; and, without limitation, Purchaser shall be
hereby authorized and empowered to execute and deliver, on behalf of Seller as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Custodian Receivable Files or the Servicer Receivable Files,
or otherwise. Seller shall cooperate with the Purchaser in effecting the
termination of the responsibilities and rights of the Seller as servicer under
this Agreement, including the transfer to Purchaser for administration by it of
all monies and cash that shall at the time be held for deposit or shall
thereafter be received with respect to a Receivable. Without limiting the
generality of the foregoing, Seller at its own expense will deliver, and if
requested by Purchaser, will cause the Custodian to deliver, upon such
termination, to Purchaser all of the Custodian Receivable Files and Servicer
Receivable Files and such other memorialized data, documents and records related
thereto (including without limitation true copies



                                       49

<PAGE>   50
of any microfilms, computer tapes and data and computer memories and any
documentary evidence of title to any Financed Property or other documentary
evidence as is required to perfect a lien and security interest in such Financed
Property) as Purchaser may reasonably deem necessary to enable it to enforce its
rights thereunder and to protect its position as owner thereof and to administer
the Receivables as successor servicer. After any such termination and delivery,
neither Seller nor the Custodian if requested by Purchaser will hold or retain
any executed counterpart or other copy of any Receivable or related material
without clearly marking the same to indicate conspicuously that the same is not
the original and that transfer thereof does not transfer any rights against the
related Obligor or any other Person.

         SECTION 7.02. Purchaser to Act; Appointment of Successor. Upon Seller
as servicer's, receipt of notice of termination pursuant to Section 7.01 or
resignation pursuant to Section 6.06, Purchaser shall be successor in all
respects to the Seller as servicer under this Agreement, and shall succeed to
all the rights, responsibilities, duties and liabilities relating thereto placed
on Seller as servicer by the terms and provisions of this Agreement. As
compensation therefor, Purchaser shall be entitled to receive from the proceeds
of the Receivables notwithstanding the provisions of Section 5.03 or any
provision of this Agreement to the contrary all costs and expenses of any kind
incurred directly or with others in connection therewith, which shall include
customary profit and overhead allocation if incurred directly by Purchaser.
Purchaser shall provide Seller with a statement thereof, which shall be
conclusive absent manifest error. However, receipt of such proceeds by Purchaser
shall not affect the right of Purchaser to receive or recover damages sustained
by reason of any breach of this Agreement by Seller or any payment which may
then be due under the terms of this Agreement to Purchaser. Notwithstanding the
above, Purchaser may appoint any Person as the successor to Seller as servicer
under this Agreement. In connection with such appointment, Purchaser may make
such arrangements for the reasonable compensation and payment of such successor
out of payments on Receivables or otherwise as it and such successor shall
agree. Purchaser and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.



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<PAGE>   51
         SECTION 7.03 Waiver of Past Defaults. Purchaser may waive any default
by Seller in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Transfer arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. No course of dealing on the part of Purchaser, nor
any delay or failure on the part of Purchaser in exercising any right, power or
privilege hereunder shall operate as a waiver of such right, power or privilege
or otherwise prejudice Purchaser's rights and remedies hereunder; nor shall any
single or partial exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege. No right or remedy conferred
upon or reserved to Purchaser under this Agreement is intended to be exclusive
of any other right or remedy, and every right and remedy shall be cumulative and
in addition to every other right or remedy granted thereunder or now or
hereafter existing under any applicable law.


                                  ARTICLE VIII

                                   Termination


         SECTION 8.01 Termination. This Agreement and the respective rights and
obligations of Seller and Purchaser shall terminate, except for the indemnities
under Section 6.02 and the representations and warranties under Sections 2.03
and 6.01 which shall survive such termination, upon the payment in full of all
of the Receivables in accordance with their terms and the satisfaction of all
obligations of Seller to Purchaser hereunder and under a Purchase Agreement of
December 31, 1992 between The Oxford Finance Company and Purchaser, a Purchase
and Servicing Agreement of July 6, 1994 between Purchaser and Seller or a
Purchase and Servicing Agreement of August 31, 1995 between Purchaser and
Seller. The Seller shall promptly notify the Purchaser of any prospective
termination pursuant to this Section 8.01.


                                   ARTICLE IX

                            Miscellaneous Provisions


         SECTION 9.01 Amendment. This Agreement may be amended only by writing
executed on behalf of the Purchaser and Seller.

         SECTION 9.02 Counterparts. For the purpose of



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<PAGE>   52
facilitating the execution of this Agreement and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.

         SECTION 9.03 Governing Law. The Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts and the
obligations, rights, and remedies of the parties under this Agreement shall be
determined in accordance with such laws, without giving effect to any conflicts
of laws principles. Seller further agrees that any legal action or proceeding
with respect to this Agreement, or the transactions contemplated hereby, may be
brought in any court of the Commonwealth of Massachusetts, or in any court of
the United States of America sitting in Massachusetts, and each of them hereby
submits to and accepts generally and unconditionally the jurisdiction of those
courts with respect to its person and property. Nothing in this paragraph shall
affect the right of Purchaser to bring any such action or proceeding against
Seller or its property in the courts of any other jurisdiction. Each of them
hereby irrevocably waives any objection to the laying of venue of any such
action or proceeding in the above described courts and further waives trial by
jury. To the extent that service of process by mail is permitted by applicable
law, such service shall be made by registered or certified mail, return receipt
requested, to the address and in the manner set forth in Section 9.04 and
Purchaser shall further use its best efforts to effect personal service.

         SECTION 9.04 Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of Seller or Seller as servicer, to The PEC Building,
4310 Paradise Road, Las Vegas, Nevada 89109, Attention: Frederick H. Conte,
Executive Vice President, Telephone: (702) 737-3700, Facsimile: (702) 3694398,
with a copy to Jerome J. Cohen, President, 1125 N.E. 125th Street, Suite 206,
North Miami, Florida, 33161, Telephone: (305) 895-6500, Facsimile: (305)
899-1824, with a further copy to Mego Financial Corp., 4310 Paradise Road, Las
Vegas, Nevada 89109, Attention: Frederick H. Conte, Telephone: (702) 737-3700,
Facsimile: (702) 369-4398, or at such other address as shall be designated by
Seller or Seller as servicer by written notice to the Purchaser, (b) in the case
of Purchaser, at 100 Federal Street, Boston, Massachusetts 02110 Attention: Real
Estate Department-Amy Weinstock Telephone: 617-434-2979, Facsimile: (617) with a
copy to BankBoston, N.A., 115 Perimeter Center Place N.E., Suite 500, Atlanta,
Georgia 30346 Attention: John Pearson, Assistant Vice President, Facsimile:
(770) 390-8434 or to such other address as shall be designated by Purchaser by
written notice to Seller.



                                       52

<PAGE>   53
         SECTION 9.05 Severability of Provisions. If any or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.

         SECTION 9.06 Officer's Certificates; Assignment. Certificates to be
provided by officers of Seller or the Guarantor pursuant to this Agreement or
the Guaranty Agreement shall be deemed given by such officer on behalf of such
corporation, and the officer or officers signing any such certificate shall not
incur personal liability therefor except to the extent that such liability would
attach under applicable law due to fraud, intentional misrepresentation or
intentional wrongdoing. This Agreement may not be assigned, in whole or in part,
by Seller without the prior written consent of Purchaser.

         SECTION 9.07 Section References. All section references shall be to
Sections in this Agreement unless otherwise specified.

         SECTION 9.08 Expenses. Seller agrees to pay, or reimburse Purchaser for
the payment of, on demand, the reasonable fees and expenses of counsel to
Purchaser, in connection with the preparation, execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby, any
amendment or modification hereof and the administration of and compliance with
this Agreement and the transactions contemplated hereby, the occurrence of any
Event of Transfer or the enforcement of the obligations of Seller.

         SECTION 9.09 Allocation of Collections. If an Obligor is obligated
under one or more Receivables and also under one or more other assets owned by
Seller or assigned by Seller to third parties, then any payment on any such
asset received from such Obligor shall, if identified by such Obligor as being
made with respect to a particular item or asset, be applied to such item, and
otherwise shall be allocated by the Seller as servicer to the Receivables before
allocation to any other amount due, including assessments required to be paid in
respect of any Financed Property in the Timeshare Project or escrows of any
payments in respect of Taxes in the case of the Land Receivables. Seller shall
not take any action to cause any Obligor to identify any payment to any
particular item or asset in reference to the Receivables.

         SECTION 9.10 Non-Assumption by Purchaser of Obligations. No obligation
or liability to any Obligor under any of the Receivables is intended to be
assumed by Purchaser hereunder and



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<PAGE>   54
any such assumption is, to the maximum extent permitted and valid under
applicable law, hereby expressly disclaimed.

         SECTION 9.11 Prohibition On Use of Name. Seller and Guarantor are
prohibited from using the name of Purchaser or the name of any Affiliate of
Purchaser in connection with any of their respective activities, except as
required in Seller or Guarantor's dealings with governmental agencies (including
the Securities and Exchange Commission, Stock Exchanges and the National
Association of Securities Dealers), financing institutions and internal business
matters.

         SECTION 9.12 Audits. Purchaser shall have the right to make periodic
audits of the Obligor files, Obligor documents, books and records of Seller and
Guarantor related to the Receivables at its discretion and at the expense of
Seller but such audit expense shall not exceed Six Thousand ($6,000) Dollars on
an annual basis provided Seller is not in breach of any provision of this
Agreement.

         SECTION 9.13 Brokers. Purchaser and Seller represent and warrant to
each other that neither has engaged the services of any broker nor had
discussions with any party entitled to a finder's fee or commission in
connection with the purchase contemplated by this Agreement.



                                       54

<PAGE>   55
         IN WITNESS WHEREOF, the parties have caused this Purchase and Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.

PREFERRED EQUITIES CORPORATION,
as Seller


  /s/  RICHARD L. RODRIGUEZ
------------------------------------------------
By:    Richard L. Rodriguez
Title: Vice President

PREFERRED EQUITIES CORPORATION, as Servicer



  /s/  RICHARD L. RODRIGUEZ
------------------------------------------------
By:    Richard L. Rodriguez
Title: Vice President

BANKBOSTON, N.A., A NATIONAL BANKING ASSOCIATION,
as Purchaser


  /s/ JOHN T. PEARSON
------------------------------------------------
By:    John T. Pearson
Title: Assistant Vice President



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